Two years ago, President Donald Trump announced plans to impose 25% tariffs on $50 billion worth of Chinese goods. A month later, China rolls out a list of more than 100 US goods worth roughly $50 billion that are subject to retaliatory tariffs.
One year ago, the US accuses China of reneging on past trade commitments, so President Trump, increases import taxes to $25% from 10% on about $200 billion worth of products from China. China retaliates against the US by announcing it will raise tariff rates on $60 billion worth of American products.
In the Fall of 2019, the U.S. and China agreed on a phase one deal. The US committed to not raising tariffs on $250 billion worth of Chinese goods to 30% and China committed to increasing agricultural purchases and addressing financial services and technology theft.
Phase 1 would provide much needed relief to the American farmers because China would buy $40 billion to $50 billion worth of American agricultural products annually.
Treasury Secretary Steven Mnuchin said the agricultural purchases could scale up to $40 billion-$50 billion annually as part of a partial trade deal, potentially more than doubling the $24 billion in agricultural and related products China purchased from the United States in 2017.
Shortly after the US and China signed the phase one deal, President Trump said they were going to start working on phase two right away…then COVID-19 hit the scene and the focus changed.
With over 3.5 million people infected and close to 300,000 deaths worldwide due to COVID-19, we are on the US is on the verge of having another trade war with China. It all stems from President Trump thinking China mishandled its responsibility and wasn’t transparent with regards to COVID-19.
US officials including President Donald Trump are increasingly banging the drums of a renewed trade war with China, spooking global markets that are already reeling from the unprecedented economic fallout of the coronavirus pandemic.
Last week, administration officials had already floated the idea of restarting tariffs on China to hold the country “accountable” for its role as the original epicenter of the new coronavirus outbreak. On Sunday, Trump said in an interview that he was considering restoring tariffs, which he called the “ultimate punishment,” and threatened to walk away from the mini trade deal that put the trade war briefly to rest.
Chinese officials and state media have stated that there has been no conclusion on the exact origin of the virus, while stating that COVID-19 did not originate in China.
The last thing the world needs right now is another trade war because the world has their hands full with COVID-19. As states in the US open up their economy, there are bound to be new cases of COVID-19. Heck, cases in some states continue to go up, despite those particular states opening up for business. Now I’m reading about the COVID-19 strain that was in Wuhan, China has mutated and the new strain that’s in the US is more contagious and if the virus persist into the Summer, it will probably mutate again.
So the question becomes, how good will a vaccine now if the virus has mutated? Equally important, what does this mean the US and worldwide economy?
This post is my personal opinion. I’m not a financial advisor, this isn't financial advice. Do your own research before making investment decisions.