RALEIGH – The trade war escalated on Friday when China announced tariff hikes on U.S. products in retaliation for President Donald Trump’s planned increase.
However, the move wasn’t unexpected, says NC State economist Dr. Mike Walden.
“In my view, the new tariffs are not enough to prompt a recession,” he told WRAL TechWire. “But if enacted, they will continue to cause slower growth in the economy.”
The tariffs of 10 percent and 5 percent take effect on two batches of goods on Sept. 1 and Dec. 15, the official Xinhua News Agency said. It gave no details of what goods would be affected but the timing matches Trump’s planned duty hikes.
Trump previously announced plans to raise tariffs on an additional $300 billion of Chinese goods after talks broke down in May. They were due to take effect Sept. 1 but some were postponed to Dec. 15.
“Yes, electronics exports from China would have higher tariffs beginning in December,” said Walden.
This is likely to hit hard tech giants like Apple, which have assembly plants in China.
However, Walden is taking a wait-and-see approach.
“Remember the Trump Administration could still reverse itself on any of the announced tariffs. I wouldn’t be surprised if some reversals did occur,” he said.
“I’m still looking for a trade ‘deal’ between the US and China sometime within the next six months. If it occurs, it likely will be a less comprehensive deal than the Trump administration initially wanted. But a deal will allow the Administration to claim victory and will help boost economic growth in 2020.”