Trump’s first trade salvo a timid one
Economic impact from tariffs ‘not material,’ but will China respond with a warning?
US President Donald Trump’s first series of long-promised tariffs on imported products came on Tuesday, underwhelming markets, with even directly affected firms shrugging off the decision.
Bloomberg reports on the minimal impact of the trade action:
- South Korea’s LG, which was hit by the 30% duties on washing machines, pared losses on Tuesday trading; China’s biggest solar panel maker, JinkoSolar, said the outcome is “better than expected”
- The share of GDP of these types of household equipment is “essentially 0.1%, at maximum”; the economic impact from tariffs is not material: Trinh Nguyen, former World Bank consultant and senior economist at Natixis SA
- Analysts say the only cause for concern is whether or not this is a sign of more things to come
- Whether or not China responds with a warning shot to dissuade more significant action is also in question
China has plenty of options to retaliate:
- Specific US companies, industries at risk for retaliation include Apple, Boeing and soybean exports
- China has long history of tit-for-tat retaliation in trade disputes
- Nationalist tabloid Global Times said China should not let the US get away without paying a price for “making unreasonable demands”; China can sell US Treasuries, restrict imports on agricultural products, machinery and aircraft, the paper warned