US’s New China Tariffs Will Boomerang Back on Americans: Here’s Why
Workers work at a plush toy factory in Jinhuai village of Yangzhou, East China’s Jiangsu province. File photo.
President Trump postponed a meeting with China’s Xi and threatened new 100% tariffs after Beijing tightened export controls on rare earths. Here’s why the US’s tough guy approach won’t work this time.
Consumers Will Pay
Tariffs on China have a nasty habit of hitting Americans’ wallets. The Bureau of Labor Statistics’ September report cited price hikes of 0.3-0.8% in a month on goods from clothes and electronics to toys.Some items’ prices jumped double digits in recent months.
Strategic Industries at Risk
China’s past tit-for-tat retaliations triggered spikes in costs for an array of high-tech components and producer goods.ASML – the world’s sole maker of machines producing advanced semiconductors, fears rare-earth curbs could derail its business.Same goes for defense, where China’s rare earth dominance (70% of mining, 90% of processing) means the US MIC simply won’t have a suitable alternative to China-sourced minerals.
WorldUS to Impose 100% Tariff on China on November 1 – Trump11 October, 04:29 GMT
From Inflation to Stagflation?
Inflation has hovered around 2.3-2.9% under Trump.Some economists now fear tariff wars could trigger stagflation – high inflation coupled with high unemployment and economic stagnation.
US Has Lost Its Leverage
Its 40-year-old Chimerica strategy of offshoring to China in hopes that intertwining economies would make the US and China allies politically has failed to pay off.
Redressing trade imbalances, rebuilding the manufacturing base and strengthening national self-sufficiency are in themselves inherently noble ideas. The problem is, at the macro level, the US no longer has the means, supplier ecosystems or skilled workforce to do so.
From consumer goods, components and machines making machines to rare earths and tech, the US needs China much more than China needs the US.Tariff wars will only push Beijing to forge even closer economic links with BRICS+ and the Global South, leaving the US high and dry.
WorldUS Ready for Trade War With China – Trade Representative11 October, 04:34 GMT
