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From Tweet to Policy - #TRUMP

We end the week where we started, feeling all  and writing about a trade war between the world’s two largest economies. The tariff bump President Trump promised on Sunday went into effect at 12:01am last night when the two sides couldn’t agree on a deal they’ve been negotiating for months.
The bump: The 10% tariffs on $200 billion in Chinese goods are now 25%. That’ll affect over 5,700 import categories, but not goods that are already cruising the Pacific on their way to the U.S. from China.  

How we got here

Trade talks hit a wall in the past few weeks as U.S. officials accused China of backing out of crucial promises (China disputes this). And not even a “beautiful letter” sent from Chinese President Xi Jinping could sway Trump, who’d been hitting China over unfair trade practices well before he even ran for office.
For most of you, trade war headlines have so far mostly been just that—headlines. Tariffs haven’t hit most consumer products like they have farmersand manufacturers. But things could change with the tariff hike and Trump’s threat to slap tariffs on $325 billion more in Chinese goods.

What happens next?

It’s not like the U.S. raises tariffs on Chinese goods and we all go have a margarita. China will respond, which, per the NYT, could include instituting retaliatory tariffs or mobilizing its consumers to boycott American products. That’s why most economists consider trade barriers like tariffs a lose-lose. China’s stock market agrees.
Of course, President Trump doesn’t see it that way. His administration has alleged China’s been ripping U.S. companies off, particularly through stealing IP. He views tariffs as the best tool to force China to abandon those practices.  
Looking ahead: Negotiators will be hitting the coffee and donuts hard as talks resume today...but under much different circumstances.

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