The US is Probably Targeting key Chinese Manufacturing Export Industries, Trade War Escalates

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Updated: Jul 11, 2018, 12:35 UTC

The United States aims for specific key manufacturing export industries like cotton, steel, and Refrigerators. The reason behind the potential tariffs on these goods is to target the metal products, auto parts as well as the electronics and textile manufacturers.

A potential implementation of the new tariffs on China will probably be a huge hit. Trump’s threat came on Tuesday and stated a 10% tariffs on $200 billion worth of Chinese imports.

According to the IHS Markit Chief Economist, Rajiv Biswas, United States aims for specific key manufacturing export industries like cotton, steel, and Refrigerators. The reason behind the potential tariffs on these goods is to target the metal products, auto parts as well as the electronics and textile manufacturers.

Rajiv Biswas said “For China, the US is its largest export market, accounting for 19% of total Chinese exports. Therefore, if the US escalates its tariff measures to an additional USD 200 billion of products, this would mean that around half of Chinese exports of goods to the US would face significant US punitive tariff measures,”

And added, “China’s export sector will, therefore, suffer a significant deterioration in export competitiveness to the US compared to other emerging markets’ manufacturing exporters, such as Vietnam, South Korea, Thailand, Bangladesh, Mexico, and Brazil,”.

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One possible scenario for these tariffs could be the intention of the United States to hit the “Made in China 2025” program which is a plan for China to become one of the big players and have a key role in the global industries, an expert at Mizuho Bank said.

The tariffs will not be implemented immediately but will go through a 2-month review process. China, on the other hand, implemented counter tariffs on the US afterward.

This article was written by Marios Athinodorou, TeleTrade’s market analyst, and commentator. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars here.