China, one of the United States largest trading partners and the second-largest economy in the world, has imposed a retaliatory tariff on the United States.
China Imposes Tariff On US
As per reports, the Xi Jinping-led Chinese Communist Party or CCP, China's ruling party, has imposed a flat 15 per cent tariff on Liquified Natural Gas (LNG) and coal from the United States.
This comes after the United States imposed tariffs of 10 per cent on imports from China. These tariffs kick from today, Tuesday, February 4.
This is crucial as the Chinese economy is one of the largest consumers of fossil fuel on the planet, and it depends almost entirely on imports to satisfy its energy requirements.
Earlier, Trump, who bumptiously imposed tariffs of 25 per cent each on his neighbours, Canada and Mexico, pulled back, just before the tariffs were to kick, in and delayed the imposition of tariffs by a month.
Prices In China To Rise
When it comes to China, it is the largest consumer of coal in the world, and although it is said to have its own resources, a dearth in supply could take energy prices in China to new heights.
These tariffs could make the availability of these goods, or worse, could increase the prices of these goods to ordinary Chinese citizens, who are already trapped in the low-consumption cycle.
The Chinese economy has been going through a period of underwhelming growth, which has largely been attributed to China's consumption problem, as regular Chinese citizens is said to have limited purchasing capacity.
China's President Xi Jinping (L) and US President Donald Trump | AFP File Image
The Trade War
Furthermore, this could also hurt the prospects of American industries, making countries like Qatar, which is one of the biggest producers of LNG, along with Russia, a viable option for Xi Jinping's China.
This, in many ways, is the continuation of the trade war that was started by Trump in his first term in 2016. The trade war was only intensified under Joseph Biden and was taken to new heights (or lows) with a 100 per cent tariff imposition on Chinese goods including medical equipment and even electric vehicles.
This is only going to increase volatility in global trade pushing it further into uncharted territories or uncertainties.
