Chinese Respond to Trump’s Response to Chinese Response to Trump’s Trade War

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Trade war!

China is retaliating against a new round of U.S. tariffs with its own levies on $60 billion worth of U.S. products, escalating the countries’ trade fight while Chinese officials weigh whether to accept Washington’s offer for more negotiations. The announcement by the country’s cabinet came half a day after President Trump announced new tariffs on $200 billion in Chinese goods, an action that left Chinese officials scrambling on how to respond. The new levies, on imports from the U.S. ranging from farm products and machinery to chemicals, will take effect on Sept. 24, the same day the latest U.S. penalties are set to kick in. The Chinese rates will range from 5% to 10%.

The conventional wisdom is that China is running out of headroom to levy tariffs at the same rate as Trump, and that’s true. But China has plenty of other actions at its disposal that can make life harder for American businesses and/or easier for non-American businesses. Either one would provide an advantage for non-American companies over American companies.

In the end, of course, the market will get whatever the market wants. It probably doesn’t matter much what Trump or Xi want. They’ll flail around, but two years down the road nothing much will have changed. You’d think a bunch of Republicans would be able to figure this out.

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