The tit-for-tat trade war between the United States and China just escalated even further. Both countries increasingly escalated their economic rivalry by increasing port fees on cargo ships. As of September 25, the simple average tariffs that the US ultimately ended up imposing on Chinese imports skyrocketed to 58%. In contrast, China limited its tariffs on US imports to 33%. This tit-for-tat move represents a dangerous increase in both countries’ distrust around trade practices and national security.
On September 25, the US Treasury Secretary Scott Bessent accused China of attempting to inflict damage on the world economy. He warned that if China’s economy tanks, they would “pull everybody else down with them.” In return, China strongly pushed back against the allegations, claiming it did not seek to threaten international economic order.
At the same time, China has increased restrictions on the export of rare earth elements and technologies using them, claiming national security reasons. These minerals are essential for our infrastructure and industries, from the electronics industry to defense. The Chinese government’s tight restriction of access to these critical resources has become one of the major flashpoints in trade negotiations with Washington.
The US is growing assertive, if not aggressive at times, against unfair and pernicious maritime trade practices. It announced plans to place duties on ships affiliated with China. This significant policy shift emphasizes the growing domestic and international pressures both countries are under as they try to balance increasingly fraught economic partnerships. The stakes couldn’t be higher! Donald Trump recently blew all of that up by announcing his plan to slap 100% tariffs on all Chinese exports beginning November 1.
As noted, tariffs are paused until November 10 in order to allow for negotiations. The possibility of new tariffs is still a huge, dark cloud hanging over this industry. China’s ministry of commerce condemned the US for “trying to threaten and intimidate,” with the new tariffs outlined by the US on Chinese exports. On Monday, the two countries conducted “working level” discussions. Their first goal was to reach consensus ahead of the Asia-Pacific Economic Cooperation summit meeting later this month in Seoul, where a meeting between Trump and Chinese President Xi Jinping is expected.
At the time of writing, these meetings were still not guaranteed to occur. China has so far not publicly acknowledged any plans for the encounter. The continued uncertainty around global trading relationships creates significant uncertainty for businesses and economies across the globe.
Beginning this Tuesday, new US tariffs on imported Canadian timber, as well as imported kitchen cabinets and upholstered furniture went into effect. These new actions are an even clearer example of the deepening economic battleground between the two countries.
Meanwhile, as both sides continue to confront these time sensitive challenges, the effect on global supply chains has become more obvious. China’s near-monopoly on those critical minerals essential to global manufacturing is still a bone of contention in current trade talks. The international community stands ready to support Mr. Alkarib and his community as this situation unfolds. These stakeholders know the results of these negotiations can have seismic impacts on global economic stability.