Trade

What are the implications of the US-China tariffs?

Andrew Walker

World Service economics correspondent

containers
Getty Images

The direct impact will be on the two protagonists, the US and China.

In the case of the US tariffs on Chinese goods, there is economic research suggesting it is American consumers who are really affected, not Chinese exporters as President Donald Trump argues.

It’s likely there will be wider consequences too although the magnitude will probably be less.

These are the two largest economies on the planet and are major export markets for many others. Any softening of demand among Chinese and American consumers and businesses is likely to affect their suppliers.

To take some possible examples, China is a key market for metals and energy exporters and for suppliers of industrial machinery such as Germany.

The US is a key buyer of consumer goods. These two markets won’t dry up, but they could be a little weaker as a result of any economic hit from the tariffs.

There could also be less tangible confidence effects that might make businesses a little more cautious about investing. Some might gain however if buyers in China and the US seek alternative, tariff-free sources of the goods they have been buying from one another.

US-China trade war escalate

BBC Radio 5 Live

China factory
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The US has more than doubled tariffs on $200bn (£153.7bn) worth of Chinese products, in an escalation of their damaging trade war.

Tariffs on those Chinese goods have risen to 25% from 10%, and Beijing has vowed to retaliate.

The move comes as high-level officials from both sides are attempting to salvage a trade deal in Washington.

China has said it will hit back with "necessary countermeasures".

The BBC's Robin Brant explains that in the past China has imposed tariffs on goods that have political significance for the US President, including soya beans - an important crop in the midwest of the US.

Business has not had much time to prepare for this latest round of tariffs, he points out.

US goods trade deficit with China narrows

US container ship
AFP

Amid high-profile trade talks between the US and China, figures released on Thursday show the US's goods trade deficit with China narrowed to a five-year low in March.

The unadjusted deficit fell to $20.7bn, the lowest level since March 2014, as exports to China jumped 23.6% while imports fell 6.1%.

US President Donald Trump has threatened to increase tariffs on $200bn worth of Chinese goods from 10% to 25% on Friday.

The overall US trade deficit increased by 1.5% to $50bn.