Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – The escalation of Donald Trump’s trade war with China, the second part of which will kick-in this September, will eventually end-up harming the U.S. economy, said a Federal Reserve official.
Dallas Federal Reserve Bank President Robert Kaplan is making it his business to sound the alarm with lawmakers and government officials about the crippling impacts Trump’s trade war will inflict on an economy that has seen steady growth over the past few years.
“What’s going on in the short-run certainly isn’t positive, but for me it isn’t sufficient yet to materially change my outlook,” said Kaplan. “It is also part of my job to call out relevant issues that affect economic growth in the United States, even if they are not in the purview of the Fed.”
He also pointed out that “I’m not doing my job if we don’t call out this trade analysis,” to the public, to Democratic and Republican policymakers, appointed officials and elected officials.
More than $34 billion worth of Chinese products were immediately hit by the new taxes that went into effect July 6. China immediately struck back and imposed retaliatory tariffs on $34 billion worth of imported U.S., including autos. Agricultural products faced 25 percent tariffs.
China said it was forced to retaliate and will match future U.S. import tariffs. The U.S. has threatened to tax over $500 billion worth of Chinese goods, or the total amount the U.S. imported from China in 2017.
In real world terms, Trump will increase the taxes on $16 billion worth of Chinese goods in two weeks. Should China counter this move, U.S. tariffs will be imposed on $450 billion worth of Chinese goods.
“We can probably say that the trade war has officially started,” said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University’s Antai Colege of Economics and Management. “If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it’s going to have a big impact for both countries.”
The Trump administration last upped the ante in its trade war with China, saying it will impose 10 percent tariffs on an extra $200 billion worth of Chinese imports.
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