Opinion | A sabre rattled1 min read . Updated: 04 Aug 2019, 10:56 PM IST
Trump's threat to impose an additional 10% tariff on Chinese imports may be just a bargaining tool aimed at scaring Beijing into a deal that’s more to his liking
US President Donald Trump’s latest sabre-rattling in the ongoing trade battle with China involves a gamble. In a series of tweets, he has threatened to impose an additional 10% tariff on Chinese imports worth $300 billion, effective 1 September. Earlier, he had erected trade barriers against industrial inputs. This will be the first time that products found in local stores and supermarkets will be priced up—or pulled off shop shelves—by his policy. Consumer electronics, apparel and a vast variety of manufactures would be covered.
It is neither the Chinese government nor its exporters that will pay the cost for such tariffs. American importers would; they would have to either switch suppliers (not easy on short notice), or fork out the money and raise prices. Since most US retailers operate on thin margins, it’s unlikely that they will absorb the extra costs. This could leave a trail of miffed consumers at checkout counters, a political risk for Trump. But then, maybe his threat is just a bargaining tool aimed at scaring Beijing into a deal that’s more to his liking. However, if China calls his bluff and shrugs it off, daring it to go ahead, it could backfire.