How will the US-China trade war impact South Africa?

Darnell Taylor
June 22, 2018

The European Union on Friday is to slap tariffs on $US3.4 billion in American products, from whiskey and motorcycles to peanuts and cranberries.

When a trade war happens, it just doesn't affect the two economies involved but all the economies open to world trade. European Union steel and aluminium exports now facing U.S. tariffs are worth a total of €6.4 billion. Increased tax burden on goods from imposed duties is also carried by the end user.

He pledged to impose tariffs on imports from countries that Mr Trump said had exploited the US.

European Union trade official Cecilia Malmström said that the European Union "did not want to be in this position", but that it had no choice.

"The rules of global trade that we have developed over the years with our American partners can not be violated without a reaction from our side", Malmstrom said.

Those personally in the line of fire are among the most concerned.

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The bloc has been threatening reprisals for President Donald Trump's unilateral decision to slap steel and aluminium entering the USA with duties, which began earlier this month. "How they'll take it, we'll have to wait and see". But in the current politically charged climate, a trade war is now a reality, as the United States decided in March to adopt an aggressive protectionist policy to correct what the Trump administration believes is a crippling trade deficit between the US and several major trading partners.

The European Union this week triggered the first phase of retaliation against the United States over its metal-import tariffs imposed on national-security grounds, making good on more than three months of threats to hit American goods with tit-for-tat levies.

Trump ran for the presidency on a vow to topple seven decades of American policy that had favored ever-freer trade among nations.

Case in point: Daimler AG late Wednesday slashed its earnings outlook for the year, saying fewer Chinese consumers will buy Mercedes-Benz SUVs because of tariffs Beijing is slapping on autos imported from the US. The big trade conflagration, however, is with China. Beijing has vowed to immediately retaliate with its own tariffs on USA soybeans and other farm products in a direct shot at Mr. Trump's supporters in America's heartland.

International Monetary Fund (IMF) chief Christine Lagarde warned on Thursday that the trade war, as well as Brexit, were the key risks to the eurozone economy.

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