For the U.S., the Trade War with China is at a Standstill

President Trump launched a trade war against China by raising tariffs as much as 25% on Chinese imports into the U.S. Pumps/turbines and electrical equipment has the highest values in imports. The purpose of these tariffs was to cut down the U.S. trade deficit with China.

Goldman Sachs economists, Alec Phillips, and Blake Taylor blame the tariffs for the increasing U.S.-China trade deficit. They say there are two primary reasons explaining how tariffs are worsening the trade deficit matter.

Firstly, the U.S. demand for select products from China did not subside. According to Phillips and Taylor, imports of items determined to be hit with a third round of tariffs went up.

Secondly, U.S. exports to China decreased. This trend began with the initiation of Trump’s tariffs in the summer. The imbalance of imports and exports caused the trade deficit to peak in October. Since the tariffs, China is not accepting soybeans from American farmers.

If the trade situation with China escalates, Trump’s tariffs will lead to nothing but trouble for the trade deficit.

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