{"articles":[{"id":4559,"title":"Trade War Tanks Stocks: Should Tariffs Continue?","html_content":"

by Causes | 6.21.18

The story

Stock prices are falling as investors absorb the possibility that the United States is on the cusp of an all-out trade war with China.

Trading tariffs

After a series of tit-for-tat tariff announcements from the United States and China, President Donald Trump threatened on Monday to impose more tariffs on $200 billion worth of Chinese goods if its government did not back down.

Trump says the tariffs are punishment for intellectual property theft.

He has recently described trade wars as “easy” to win.

Implications

Some experts note that China has a “nuclear option” in this struggle: It can just stop buying U.S. Treasury debt. China is the world’s biggest Treasury investor, keeping U.S. borrowing costs low and helping Americans buy more Chinese goods. Ending this relationship just when U.S. budget deficits are soaring would devastate the U.S. economy, although it could also gut China’s in the process.

Meanwhile, major U.S. oil pipeline companies are seeking relief from Trump’s steel tariffs, which are sending prices soaring for pipeline components. No U.S. mills are able to make pipe to some of these companies’ specifications, and protracted tariffs could raise oil prices from the largest U.S. oilfield.

U.S. consumers are already feeling the effects of the tariffs, with the price of washing machines up 17 percent in the last three months.

What do you think?

Is Trump right to continue using tariffs as a means to extract trade concessions from China? Are tariffs more likely to harm Americans in the event of a trade war? Hit Take Action, then share your thoughts below.

—Sara E. Murphy

(Photo Credit: Flying Cloud via Flickr / Creative Commons)

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