President Trump has announced the raising of tariffs on China effective Sept 1st and October 1st, 2019. This is one arrow in a quiver filled with economic consequences:
- The preexisting 25 percent tariff on $250 billion in Chinese goods will increase to 30 percent effective October 1st, 2019.
- The pre-planned 10 percent tariff on $300 billion worth of Chinese goods will increase to 15 percent, effective September 1st, 2019.
This targeted tariff approach is only a small sample of the economic action that is available to President Trump. There are a host of tools and targeted economic weapons available to President Trump that are far more damaging to Beijing.
This announcement also sends a clear message to the members of the G7 as they prepare for their meetings in France.
Additionally, President Trump is setting up a political dynamic that is visible on the horizon. As the trade conflict gets more serious; as President Trump targets more leverage upon the Chinese economy; he is positioning the 2020 Presidential race as a choice between two candidates: Either President Trump, or Chairman Xi Jinping.
Voting for the best outcome for USA and Main Street will mean a vote for President Trump. Voting for the best outcome for China and Wall Street will be a vote for the Democrat candidate.
President Trump is clearly, and smartly establishing this domestic political dynamic within the trade conflict with Beijing.