Date of this Version
Cornhusker Economics, October 3, 2018, agecon.unl.edu/cornhuskereconomics
In July 2018, President Trump imposed a first round of 25-percent tariffs on Chinese electronics and high-tech equipment including automobiles, computer hard drives, and LEDs. The tariffs were imposed on roughly $34 billion worth of imported goods. In August 2018 additional 25-percent tariffs were imposed on $16 billion worth of Chinese exports to the United States and in September tariffs on $200 billion worth of Chinese exports to the United States were added. (Bradsher, 2018). The Trump Administration has also imposed automobile, steel and aluminum tariffs on imports from Canada, the European Union and other countries.
In response to the first two sets of tariffs, China placed retaliatory tariffs on $60 billion dollars of imports from the United States matching the value of the goods subjected to U.S. tariffs. According to Bradsher (2018), Chinese imports from the United States are so much smaller than U.S. imports from China that the Chinese government was unable to match the magnitude ($200 billion) of the latest round of U.S. tariffs, applying tariffs only to an additional $60 billion worth of U.S. goods. The Chinese tariffs target sensitive U.S. sectors including several agricultural industries. In the initial round of retaliation, for example, U.S. soybean exports to China—which account for more than 50 percent of total U.S. soybean exports—were hit with 25 percent tariffs. Swanson et al. (2018) reported predictions that the tariff would cause the average annual 2018 soybean price to fall from an expected $9.70 per bushel if no tariff were imposed to $8.85 per bushel.