China and US Trade War Intensifies, Impacting Businesses and Consumers

China has responded to the United States' trade actions with retaliatory tariffs. Following President Trump's announcement of a 34% tariff on Chinese goods imported to the US, China imposed a reciprocal 34% tariff on US imports, effective April 10th. The China State Council Tariff Commission cited "bullying" as the reason for this action, stating that the US practice violates international trade rules and undermines China's interests.

The impact of these tariffs is expected to be significant, although the US may be less affected due to the trade imbalance. The US imports far more from China than it exports. In 2024, the US imported approximately three times the value of goods from China compared to its exports to China. This imbalance creates a trade deficit, which was a prime target for President Trump.

The economic relationship between the US and China has been shrinking, with trade between the two countries accounting for a relatively small percentage of global goods trade. Key US exports to China include fuel products, machinery, and electronics. However, China also purchases significant amounts of US technology. The reciprocal tariffs will impact various sectors, including integrated circuits, gas turbines, and automobiles.

Major American brands are expected to suffer from these changes. Companies like Boeing, Apple, and Caterpillar, which export to China, will likely be affected. The pharmaceutical industry, with significant exports of vaccines and medicine to China, is also at risk. The agricultural sector is anticipated to be the most severely impacted, particularly US soy exports.

The tariffs on US farmers could have a significant impact on President Trump's political base. China's retaliation is strategically targeting this population, hoping to influence Trump's decisions. American consumers will also likely feel the effects of the tariffs. Electronics and machinery are the top goods imported from China, impacting various aspects of American life. Textile imports may also affect consumers, and the end of an exemption for low-value products could lead to price increases for popular brands.