The US plans to hit China hard with new tariffs, which has shocked the global markets once again.

Just weeks after Trump’s rather spontaneous announcement that his administration will be imposing tariffs on steel and aluminum imports, a decision that has been a hot topic ever since as many experts and politicians seem to disapprove of, earlier today he announced new tariffs, this time specifically targeting China.

Trump spoke about the trade deficit the United States has with China which, according to him, is the largest in global history. Even during his campaign, Trump did speak of the problems in the trade relations between the United States and China. In particular, a big issue pertains to intellectual property: Chinese companies who manufacture many American goods seem to have their ways of obtaining US intellectual property and often produce their own startlingly similar goods. In this respect, tariffs on intellectual property have been imposed on goods worth about $50 billion. Trump also mentioned an additional demand of about $100 billion that he has made of Chinese officials, though that is yet unclear.

China, on the other hand, was quick to issue a statement that is it not in the least bit scared of a trade war. After Trump’s previous round of tariffs that focused on steel and aluminum imports, China hit the United States with its own tariff law on American imports worth about $3 billion. While it seems that China is fully capable of retaliating, its Prime Minister did express a reluctance to enter into a trade war, saying it could only harm the global economy.

An interesting point of contention between the two countries would be the US relationship with North Korea. As two neighboring socialist states, North Korea and China have been getting along. In fact, North Korea has been dependent on China for many of its imports, since it is an otherwise very isolated country. Even though China has been complying with international demands regarding North Korea, it still remains Pyongyang’s only friend.

During Trump’s last meeting with Chinese President Xi Jinping, there seemed to be an agreement between the two that China will help the States keep a close eye on North Korea, whose military program troubled the region and the US last summer with multiple successful missile tests. Now that Trump has agreed to meet with North Korean leader Kim Jong-un, it hardly seems like a good idea to get on China’s bad side, since the country has so much leverage and could be an important ally in the negotiations. It is likely that the role of chief ally in the talks has been passed onto South Korea, which recently renewed its diplomacy with North Korea around the Olympics, with the leaders of the two Koreas set to meet soon. . Furthermore, Trump appointed John Bolton to the post of national security advisors – Bolton has been a supporter of outright war with North Korea, which China has been trying to prevent.

These recent developments have sparked new fears over a global trade war. Previously, when Trump announced tariffs on steel and aluminum imports, many countries expressed their discontent. Since then the European Union, Canada, Mexico, Australia, Argentina, Brazil, and, interestingly, South Korea have been exempt from these tariffs, somewhat alleviating the situation. Still, this made that first round of tariffs seem all the more focused on China.

Economists are concerned about the negative impact a trade war could have on the American economy. The United States export a lot of things to China, especially agricultural goods such as pork meat and soybeans. If China chooses to put tariffs on those, then American farmers will be in a tough spot. Many everyday items in the US like electronic devices could also get more expensive. While the US economy has been doing well for a few years, a trade war with China is very likely to disturb the recovery process and slow down economic growth.