Last week came and left without the United States and China reaching the trade deal that was promised to investors earlier. On Friday President Trump hit China with severely increased tariffs on $200 billion worth of goods, yet this did not stop the negotiations. However, as the talks between the world’s two largest economies continued, the tone turned even more sour.
The American team complained that China is refusing to implement changes to its law system that will be beneficial for the United States doing business there. According to Trump, these changes were agreed upon previously and China only now changed its mind. However, the Chinese negotiators said that they would never agree to anything that will harm China’s own interests, i.e. they were never on board with these proposed law changes and will not agree to them.
President Trump continues to insist that China is paying the tariffs, but in fact the burden falls to the American economy. China will still sell its goods at the prices it normally does, but American importers and manufacturers will be paying the tariff fees to the US government. This will hike up costs for American businesses and force them to increase prices for the US market. In effect, China’s business will continue as usual, while American consumers have to deal with higher prices. Even if US companies switch to different suppliers in order to avoid the tariffs, it is highly unlikely they will be offering goods at a lower price than China.
