Trade Talks with China Set to Resume

On March 1st of this year, United States’ tariffs on Chinese goods are set to increase from 10% to 25%, marking an important escalation in the current Trade War between the two countries. This week Mr. Trump and Chinese officials are set to meet to discuss ways of possibly avoiding this escalation. Last year, the United States slapped an estimated total of $250 billion of tariffs on Chinese imports, while the Chinese responded with $110 of tariffs on United States goods. These tariffs have primarily provided the agricultural sector of the Midwest with the heaviest economic burden, and China has displayed a slower economy since the tariffs took effect.

However, critics of the Trade War claim that an increase in tariffs can escalate the trade war and put farmers out of business. Perhaps reaching a deal with China could help Trump’s political standing, after emerging from a 35-day shutdown with a low approval rating. His advisors seem to be divided on the issue, therefore it is almost entirely up to Trump himself which way he wants to go.

These tariffs have had, and will further have, major implications for American Businesses. At the most basic level, all of the tariffed goods will become more expensive to compensate for the newly imposed duties. As these goods become more expensive to Chinese consumers, supporters of the tariffs argue, the producers of these goods will become more profitable in the end. Indeed, American consumers will also be faced with the predicament of more expensive goods on the market, hitting their wallets pretty hard. When a product becomes more expensive, consumers have to pay more in literal terms, but also some forgo purchasing the product they otherwise would have (without an increase in price), therefore both parties are affected. Clearly, these tariffs are not just affecting the agricultural sector, but the retail sector as well. The broader economic impact of these tariffs remains to be seen, but certainly the business environment will not be the same.