US to raise tariffs on imports from China to over 100% after Trump's key deadline passes | DW News

Key Concepts:

• Retaliatory tariffs, US-China trade war, tariff escalation, prohibitive tariffs (100%), economic power, political perception, consumer impact, employment impact, manufacturing reshoring, productivity, labor share, automation.

1. US-China Trade War Escalation:

• President Trump's deadline for China to remove retaliatory tariffs on US goods passed without action.
• Trump threatened an additional 50% tariff on Chinese imports.
• China's Ministry of Commerce called the new US tariffs "bullying" and vowed to retaliate.
• Trump initially imposed a 10% tariff on all Chinese goods, which was doubled to 20% in March.
• He announced another 34% tariff to take effect on April 9th.
• Trump threatened an additional 50% levy if China didn't rescind reciprocal tariffs, potentially bringing total US taxes on Chinese imports to 104%.

2. Tariff Limits and Economic Power Dynamics:

• Meredith Crowley, Professor of Economics at the University of Cambridge, explains that tariffs around 100% become "prohibitive," making exports unsustainable due to loss of customer base.
• The US has more economic power in this case because it imports more from China than China does from the US.
• China perceives the US tariffs as "bullying" and is concerned about the political implications of backing down.

3. Impact on Consumers and Workers:

• US Consumers: The initial rounds of Trump tariffs had already passed through to US consumers, particularly affecting lower-income individuals who spend a larger portion of their income on material goods. The bottom 20% of the income distribution are more hard hit by tariffs than say an income tax.
• Chinese Consumers: China doesn't import as many foreign consumer goods as the US, so the impact on Chinese consumers may be less direct.
• Chinese Workers: The bigger concern in China is job losses due to reduced production resulting from US tariffs.

4. Manufacturing Reshoring and Automation:

• Trump aims to bring manufacturing jobs back to America.
• Crowley argues that increased US productivity through automation means that even if manufacturing returns, it won't necessarily translate into a significant increase in jobs.
• Since 1980, US manufacturing employment has declined during recessions due to investment in automation and increased productivity.
• US wages are high, so companies investing in US production will likely prioritize labor-saving technologies like robots.
• The US has continually invested in productivity which means reducing the labor share in manufacturing.

5. Notable Quotes:

• China's Ministry of Commerce: called the new US tariffs "bullying" and vowed to retaliate.
• Meredith Crowley: "At some level once you hit tariffs of about 100% Those tariffs essentially become prohibitive."
• Meredith Crowley: "The Chinese um feel very much that this is a sort of bullying situation and in terms of the perception of their domestic constituents you know how it would look if they reduce um their tariffs and you know give the the sort of perception that they're buckling to US pressure that could be damaging for them politically."

6. Technical Terms:

• Retaliatory Tariffs: Taxes imposed on imported goods in response to tariffs imposed by another country.
• Prohibitive Tariffs: Tariffs so high that they effectively prevent imports.
• Labor Share: The portion of a company's revenue that is paid out in wages and benefits.

7. Logical Connections:

• The escalation of tariffs is presented as a tit-for-tat response, highlighting the potential for a trade war.
• The discussion of economic power dynamics explains why neither side may be willing to back down easily.
• The analysis of consumer and worker impact shows the real-world consequences of the trade war.
• The discussion of manufacturing reshoring and automation challenges the assumption that tariffs will automatically lead to job creation in the US.

8. Data and Statistics:

• Trump initially imposed a 10% tariff on all Chinese goods, which was doubled to 20% in March.
• He announced another 34% tariff to take effect on April 9th.
• Trump threatened an additional 50% levy if China didn't rescind reciprocal tariffs, potentially bringing total US taxes on Chinese imports to 104%.
• The bottom 20% of the income distribution are more hard hit by tariffs than say an income tax.

9. Synthesis/Conclusion:

The US-China trade war is escalating, with tariffs reaching levels that could become prohibitive. While the US may have more economic leverage, China's political considerations make it difficult to back down. The tariffs are likely to impact consumers and workers in both countries, with lower-income consumers in the US and Chinese workers being particularly vulnerable. Trump's goal of bringing manufacturing jobs back to the US may be difficult to achieve due to automation and the high cost of labor. The situation is complex and requires careful consideration of economic, political, and social factors.