The trade tensions between China and the U.S. are escalating as Beijing imposes tariffs on specific U.S. agricultural goods in response to President Trump’s tariff hikes. Experts suggest that these tariffs aim to impact Trump’s voter base while economic conditions in China remain precarious. The Chinese government has set an ambitious growth target despite internal economic challenges, indicating the complex situation ahead.

Tensions in the trade relationship between China and the United States are poised to intensify on March 10, 2025, as Beijing imposes tariffs on certain U.S. agricultural products in response to President Donald Trump’s recent tariffs increase on Chinese imports. Since January, Mr. Trump has implemented a series of tariffs targeting major trading partners, including a blanket 10% tariff on all Chinese goods raised to 20% shortly thereafter.

In retaliation, the Chinese Finance Ministry accused the U.S. of “undermining” the multilateral trading system, announcing tariffs of 10% and 15% on various U.S. agricultural goods beginning on Monday. Affected products include chicken, wheat, corn, and cotton, with soybeans and other agricultural items subjected to the lower tariff rate. Analysts suggest that these measures aim to impact Mr. Trump’s voter base while allowing negotiation space for a potential trade deal.

This ongoing trade dispute complicates the efforts of Chinese leaders, who grapple with a declining economy characterized by sluggish consumer spending, a persistent debt crisis in the property sector, and elevated youth unemployment rates. Despite record-high exports last year, the escalating trade war with the U.S. threatens to diminish this economic support as the situation evolves.

While the complete effects of the recent tariffs have yet to manifest, early data indicates a downturn in exports. Official figures reveal a mere 2.3% year-on-year growth for Chinese exports in the first two months of 2025, a stark contrast to the 10.7% growth observed in December. Economic experts, including Zhiwei Zhang of Pinpoint Asset Management, emphasize the necessity of proactive fiscal policies as the potential trade war looms.

During China’s annual political gathering, Premier Li Qiang outlined the government’s economic strategy, citing an “increasingly complex and severe external environment”. He set the official growth target for 2025 at approximately 5%, the same as in 2024. However, many economists view this target as overly optimistic given the current challenges. Julian Evans-Pritchard of Capital Economics remarked that while increased fiscal spending may mitigate short-term growth impacts, persistent headwinds may prevent achieving sustained economic improvement.

In conclusion, the escalating trade tensions between China and the United States underscore significant economic challenges for both nations. While China imposes retaliatory tariffs on U.S. agricultural goods, domestic economic issues compound the complexity of the situation. With export growth slowing and ambitious government targets set amidst these challenges, the effectiveness of fiscal policies will be critical in navigating the difficult economic landscape ahead.

Original Source: www.thehindu.com

Related posts:

Escalating Trade Tensions: U.S. Tariffs Trigger Retaliatory Actions from Canada, China, and Mexico White House Confirms Tariffs on Imports from Canada, Mexico, and China Impact of New Tariffs on US-China Trade Relations President Trump Criticizes India’s High Tariffs and Announces Reciprocal Measures