It started after the US more than doubled tariffs on Chinese imports, with the latter retaliating by announcing new tariffs on American goods starting June 1. The trade war has shaken up stock markets worldwide, and with no signs of a de-escalation, market pundits are forecasting a global slowdown and even a recession if the impasse continues. Indian stocks have been under pressure, with the benchmark Sensex falling 2,000 points in nine days up to May 13.
On May 10, the US carried out its threat of hiking tariffs on $200 billion worth of Chinese goods (from the 10 per cent imposed earlier) to 25 per cent. As many as 5,700 products were affected. A day later, Washington threatened more tariffs on almost all of China’s exports. If implemented, an additional $300 billion worth of Chinese goods will be affected.
China was not likely to take any of this lying down. Despite trade talks between vice-premier Liu He and US trade representative Robert Lighthizer in Washington, on May 13, China imposed retaliatory tariffs on $60 billion worth of imports from the US, hiking tariffs from 10 per cent on goods such as beer, wine, swimsuits, shirts and liquefied natural gas to 20 or 25 per cent.
The hikes will impact the revival of the US economy, as consumers end up paying higher prices for products, stoking inflation. For China, things could be far worse, as the US is its largest trade partner. China exported goods worth $540 billion to the US in 2018, but imp&sh