Escalating his trade war with China, President Donald Trump bumped up his tariffs on Chinese imports Friday, lashing back after Beijing raised taxes on U.S. products.
In a tweet, Trump said he would be raising planned tariffs on $300 billion in Chinese goods from 10% to 15%. The Office of the U.S. Trade Representative also said existing tariffs on another $250 billion in Chinese imports would go from 25% to 30% Oct. 1 after receiving feedback from the public.
The move came hours after Beijing said it would hike tariffs on $75 billion in U.S. imports, escalating a conflict over trade and technology that threatens to tip a fragile global economy into recession.
Trump also "hereby ordered" American companies with operations in China "to immediately start looking for" an alternative after Beijing announced a series of retaliatory tariffs.
But as U.S. stock indexes tumbled, the White House offered no further details or explanation of Trump's intentions.
Former U.S. Rep. Charles Boustany, a Lafayette Republican who is now a spokesman for Tariffs Hurt the Heartland, a nonpartisan organization in Washington, D.C., said more than 5,000 exports will be affected by the latest round of tariffs. According to CNN, this covers items such as soybeans, coffee, whiskey, seafood and crude oil.
“This will impact everybody in the country and have a big impact on Louisiana because we’re very dependent on trade and China is a big partner,” he said.
Boustany said that while there’s broad agreement across Louisiana and the U.S. that America needs to get tough on China regarding trade, tariffs are not the best way to do it. “There’s a lot of collateral damage and the economic damages of the tariffs outweigh the impact,” he said.
China isn’t going to change its trade policy just based on the U.S. acting alone. America needs to recruit allies in the trade fight, something he said Trump hasn’t done. “Doing this unilaterally is putting the U.S. economy at risk of a recession,” Boustany said.
According to Tariffs Hurt the Heartland, which has been crunching federal import and export data by state, as of June, Louisiana businesses have paid an extra $223 million on import taxes on products subject to the Trump tariffs. Louisiana companies have paid $139 million in retaliatory tariffs on exports during the same time period.
The organization warned that the trade dispute could cost up to 34,900 jobs in Louisiana.
Faik Koray, the chair of the LSU Department of Economics, said the ongoing trade dispute between the U.S. and China is increasing uncertainty in the market and will lead to an investment slowdown that will hurt the U.S. and world economies.
“As an economist, I’m against tariffs,” Koray said. “It doesn’t do any good to either the country imposing the tariffs or the country where the tariffs are being imposed.”
The impact could be sweeping for consumers.
"With each percentage point added to the tariff hikes, it becomes more and more difficult for importers not to pass the costs on to the U.S. consumer," said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute. "And this is not to mention the uncertainty that these increases contribute to the overall business environment."
Trump has used the tariffs against China as a means of getting companies to move operations back into the U.S. and to get a better trade deal with the country. But Koray said those tactics aren’t working. Businesses leave the U.S. as a way of dealing with rising production costs for goods.
And about the only areas where the U.S. could get better trade agreements with the Chinese is with issues of copyrights, a field where the country has a “notorious reputation.”
“You look at the deals the U.S. made with Mexico and Canada,” Koray said. “Did the U.S. get any improvements? Probably not.”
The tariffs already have had an impact on Louisiana trade with China.
In 2018, Louisiana exports to China, which had been the state’s biggest trading partner, dropped by more than 60% to $3 billion from $7.7 billion in 2017, according to U.S. Census Bureau figures. China, which had been a major market for Louisiana soybeans, oil, gas and chemical products, fell to being the state’s sixth-biggest trading partner. Louisiana now ranks 11th in the nation for exports to China.
Despite that dramatic drop in the amount of goods headed for China, the overall value of Louisiana’s exports rose by 18% in 2018 from the year before as other countries picked up the pace. Expanded export markets for Louisiana for 2018 include Mexico, up 27%; South Korea, doubled; Brazil, 34%, with similar gains to Canada and the Netherlands.
What has powered the increase in exports has been Louisiana’s energy sector: petroleum; crude oil from petroleum; and liquefied natural gas.
Louisiana’s exports worldwide were valued at $67.3 billion in 2018, up from $56.8 billion in 2017. Exports from the state accounted for 4% of all U.S. outbound trade activity, up from 3.7% in 2017.
While 2019 export figures for Louisiana aren't available yet, the Census Bureau said the value of U.S. exports to China in the first half of 2018 topped $64.1 billion — taking a nosedive in the first half of 2019, falling by nearly 19% to $52 billion.
The volume of Chinese imports to Louisiana dropped slightly between 2017 and 2018, from $1.37 billion to $1.36 billion, the largest import item being chemicals used to feed the growth of petrochemical industry plants in the state, according to the Foreign Trade Division and U.S. Census Bureau.