Donald Trump, US-China, China, Trade
Donald Trump has ramped up the trade war rhetoric against China....on Twitter. | Source: REUTERS/Kevin Lamarque

Trump Warns China: ‘Act Now’ or Face $100 Billion in Tariffs Every Year

By CCN: Donald Trump is going out all guns blazing against China after the US substantially hiked the tariffs on $200 billion worth of Chinese goods last Friday. The American President believes that he has the upper hand in this trade war with the Chinese, accusing the other side of breaking the deal and trying to renegotiate a new one.

Trump believes that the American economy is all set to pocket a cool $100 billion thanks to the tariffs imposed.

But that won’t be the end of it as rabble-rouser Trump has made yet another claim as he looks to raise support for himself going into the election year.

Make a deal right now, or keep paying

Trump won’t stop choking China anytime soon. He is trying to wrestle the opposition into submission with yet another threat.

While some might be laughing at Donald Trump’s confidence toward securing a second term, the Chinese will be shaking in their boots. After all, Trump’s approval rating recently hit its highest level of 46%, according to Gallup.

The American economy has gathered momentum under the Trump presidency. This is evident from the 3.2% growth in the real GDP during the first quarter of 2019, which easily surpassed the market’s expectations of 2.1%.

What’s more, the unemployment rate in the US dropped to a 49-year low in the month of April. The addition of 263,000 jobs last month pushed the unemployment level to just 3.6%, putting another feather in Donald Trump’s cap.

It is clear that Trump is buoyed by these numbers. He is using them to threaten China to arrive at a deal quickly or risk facing his wrath after he wins a second term as a president.

Is Trump setting the stage for a re-election pitch?

Trump is setting the stage for a campaign pitch wherein he can go and tell the American people that he is bringing billions of dollars into the economy every year. The President claims that the billions gained from China can be used for making goods in America itself, or buying them from nations where no tariff is imposed.

Clearly, the President is riding high on the economic success he has seen this year and wants to push the advantage further by taxing the life out of China.

Trump has already raised tariffs to 25% from the erstwhile 10% on $200 billion worth of goods. The Office of the United States Trade Representative is now saying that they have been told to “begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300 billion.”

Could the move backfire?

But then, it is believed that Donald Trump’s actions will end up costing the American people. Oxford Economics points out that the latest tariff hike will dent the American economy to the tune of $62 billion by next year, with each household footing a bill of $490. However, the cost to each household could rise to $800 if Trump goes all out with his protectionist policies.

Oxford Economics believes that the current tariff structure could lead to 200,000 fewer jobs, with economic growth dropping to 2%. More extreme measures toward China could end up costing the US economy 360,000 job additions and $100 billion in GDP.

But the upside to Trump’s latest threat of forcing China to pay heavy tariffs year after year could force the latter to agree to a deal that’s more favorable for the US. After all, Trump is buoyed by an improvement in his ratings and America’s improving economy.

This has encouraged Donald Trump to play hard and consider slapping the Chinese with more duties to weaken their economy, and also warn them against any retaliation.