The restriction on US imports in China was a response to America's increase in duties on imported metals. The PRC warns that the retaliatory measure will affect aircraft, agricultural and some other products. Part of the market will be retained by replacing American goods with Russian ones.
Trump decided to protect the US domestic market from a huge amount of Chinese goods. This could lead to changes in the rules of international trade. Today, the matter has been limited to the compilation of lists with the limitation and introduction of duties on the metallurgical industry. This action has led to a drop in the value of many companies located around the world.
What is the reason for restricting US imports to China?
When Donald Trump was the American presidential candidate, he promised powerful support to national producers. He kept his promise, but he did it in such a way that not only China, but also Russia and the European Union was the loser.
The new restrictions will exacerbate global trade tensions. In this way, America is trying to punish Beijing for the theft of intellectual property. The restriction on US imports in China is reflected in water duties of 25% on steel imports, 10% on aluminum.
Chinese officials studied the list of restrictions and reacted rather calmly to the increase in duties. The next step is expected to expand the list to include household appliances, electronics, clothing and footwear.
Responsiveness
The Chinese responded by imposing duties on American products. On the part of Russia, measures are also being developed to restrict the import of American goods. This should lead to an increase in trade between Russia and China.
Chinese Foreign Ministry spokeswoman Hua Chunying warned that such restrictions would lead to a trade war in which everyone would be the losers. Despite this, the damage to the PRC is not so great, for example, sales of Chinese steel to the United States account for about 3% of the total export of goods to the country.
If Beijing retaliates further, seriously limiting the import of goods from the United States, then American manufacturers will face difficulties in supplying them to China:
- transport;
- aircraft;
- agricultural products.
Experts say it will be easier for China to find new suppliers than the United States to find new consumers.
As a result of such a trade war, American business could lose one of the largest and fastest growing markets in the world. In addition, China has consolidated more than a trillion dollars in US bonds. If you start selling them, the entire US financial system will be undermined in a short space of time.
Reaction in the world and America
The decision led to the emergence of a huge amount of criticism from the European Union, Canada and the PRC. More than 40 associations that represent the interests of American companies have asked to postpone the introduction of duties. In their opinion, the new tariffs will negatively affect the US domestic market.
On March 30, 2018, Izvestia reported that agricultural products from Russia could completely displace American imports in the Chinese market. Our wine products, soybeans and pork can completely replace the American counterparts. The PRC plans to look for other, more predictable suppliers, which will lead to a strengthening of relations between this country and the Russian Federation.
Can investments be subject to restrictions?
Trump is going to influence Chinese capital as well. The Ministry of Finance received instructions to prepare restrictions on investments in the US economy by companies from China. The latter is America's largest creditor, holding about 19% of US government securities. If China stops buying bonds, the loss of foreign support will lead to serious financial losses.
Mutual decisions were instantly reflected in the market. Shares of companies around the world have declined. This especially affected enterprises operating in the field of trade, finance, industry and raw materials.
