Capital Economy, Business and Finance
Beijing vowed to “fight to the end” after Donald Trump responded to tit-for-tat tariffs – some of which take effect today – by threatening to nearly double taxes on Chinese imports.
This escalation brings the effective tariff rate on China to 104 per cent and marks a new low in a relationship worth more than $500 billion to the world economy.
Qui bono? On the face of it China stands to take a hit on the nearly $300 billion more in goods it exports, rather than imports, from the US.
But Beijing has also become increasingly agile, redirecting exports to other markets and diversifying the goods it sells abroad.
For example, total vehicle exports are up more than 600 per cent in just five years, driven by electric vehicle makers such as BYD.
That acceleration has already prompted the EU to impose tariffs of its own.
By forcing China to sell elsewhere, Trump is unleashing a world of protectionist copycats, all worried about a new shock from cheap Chinese goods.
Photo credit: STRINGER/AFP via Getty Images
