President Donald Trump slapped tariffs on an additional $300 billion worth of Chinese goods, prompting China’s government to promise “countermeasures.” Per usual, the announcement of new tariffs came via Twitter, with President Trump stating that the new tariffs would take effect on September 1st.
President Trump had previously stalled slapping China with tariffs in hopes that the country would back down and agree to trade reforms. Now the de facto truce is broken. All Chinese goods entering the United States will now be under tariffs. While President Trump had been warning of additional tariffs, the announcement came as a surprise.
Global markets have been rattled by the announcement. Wall Street fell sharply but Asian stock markets were hit harder, with losses to the Nikkei (Japan) and Hang Seng (Hong Kong) indices topping two percent. The Shanghai index was down nearly 1.5 percent.
The U.S. Federal Reserve recently announced an interest rate cut and may do so again in September. While the U.S. economy has remained strong, the escalating trade war may slow economic growth. The tariffs are expected to hurt consumption and retail jobs as prices for goods including laptops, toys, and other consumer goods rise.
Still, America’s economy continues to expand. 167,000 jobs were added in July and the unemployment rate remained at a historically low 3.7 percent. Better yet, wages were up 3.7 percent from a year prior. The Federal Reserve has stated that the outlook for the U.S. economy is favorable.
Outside of the United States, economic growth has been tepid. In China, the Purchasing Manufacturing Index weighed in at 49.9, suggesting contraction. This comes even as the Chinese government has tried to stimulate the economy.