This week the winds of war blew more tariffs into town.
Both the U.S. and China have announced their next tranche of $16 billion worth of tariffs, rounding out the first $50 billion each committed to levying on the other’s exports.
The U.S. released its list of 279 targeted items Tuesday for the $16 billion worth of tariffs, which still omits products from the apparel and textiles industry, and focuses largely on chemicals connected to industrial equipment.
Customs and Border Protection will begin collecting the new 25 percent duties on Chinese imports as of Aug. 23.
Right in line with the U.S. announcement, China’s Ministry of Commerce confirmed that its own list of $16 billion worth of tariffs on U.S. exports will also face additional 25 percent duties starting Aug. 23. China’s list of target U.S. goods includes animal hair fibers (recycled or otherwise), cotton recycled fiber, cotton yarn and thread waste, man-made fiber waste, sorted textile materials and shredded fabrics.
The back-and-forth tariff attacks between the U.S. and China shows no sign of abating as each wants the other to back down and both feel right about the actions they’re taking—none of which has so far included much that resembles backing down.
For President Trump at least, the tariffs appear to be garnering the affect he was going for in rebalancing trade.
On Sunday, Trump tweeted, “Tariffs are working big time. Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come, Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth…..”
A follow-up tweet went on to say, “..Because of tariffs we will be able to start paying down large amounts of the $21 trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum we will make much better trade deals for our country.”
But tariffs may not in fact be working “big time.”
On Friday, the U.S. Department of Commerce said the U.S. trade deficit—which Trump claims his tactics are squarely focused on reducing—is up 7.2% year over year to $46.3 billion in June. Between May and June alone, the deficit climbed $3.2 billion. And some have said the deficit could climb as high as $100 billion this year.
The U.S. dollar is also strengthening, which goes against the claim that tariffs are having the desired effect, as a stronger dollar makes the U.S. less competitive when it comes to trade.