Stakes escalate in China-US trade dispute

The US this week raised its earlier threat on new punitive tariffs from 10 % to 25 %. The list of products concerned, currently out for comments, covers $200 billion a year in Chinese imports. China announced that it would respond immediately to such measures. The 25 % import tariff hikes on both sides affects currently $34 billion in bilateral imports. An additional $16 billion in imports on both sides is under consideration (BOFIT Weekly 28/2018).

The US this week announced $113 million in investments in emerging Asian economies. US Secretary of State Mike Pompeo described the gesture as a "downpayment on a new era of US economic commitment to the Indo-Pacific region." The investment will focus on energy, technology and infrastructure. Pompeo said the US seeks an independent and open Asia, where no single country dominates. The initiative is a response to the Silk Road project and China's growing regional influence.

One of Trump's earliest acts as president was to issue an executive order to withdraw from the Trans-Pacific Partnership (TPP). Last April, Trump said the US was considering re-joining the trade pact.