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Escalating U.S.–China tariffs would have global economic impact

Chinese shipping containers transporting U.S. soybeans
China-bound shipping containers in Illinois loaded with U.S. soybeans, a likely target of retaliatory tariffs by China. Photo: Scott Olson/Getty Images

After China matched the United States on its initial round of $50 billion in tariffs, President Trump threatened tariffs on an additional $200 billion in Chinese goods — and then threatened to respond to any further Chinese retaliation with yet another $200 billion in tariffs. That sounds a lot like a real trade war.

Why it matters: It is possible to pick a tariff list that covers $50 billion of imports from China that does minimal damage to the U.S. economy. It isn’t possible, however, to come up with a list that covers $450 billion in imports without including sectors where China is the dominant supplier — and thus where tariffs are likely to raise consumer prices.