As tensions rise between the US and China, escalating tariffs are impacting both economies. Zongyuan Zoe Liu, fellow for international political economy at the Council on Foreign Relations, joins Morning Brief to discuss how the tariffs are likely to hurt US consumers and manufacturing.
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Amid the growing trade war here, you can see stocks flipping around this morning between negative and positive. Your tech heavy NASDAQ moving to the upside here. This coming as China increases its retaliation against President Trump's 104% tariff. Beijing announcing this morning, it will raise tariffs on imports from the US to 84%. That's up from that 34% announced a week ago and the 84% set to go in effect on April 10th. Here with more on how the trade war could play out, we've got Zoe Leo. She is the Council on Foreign Relations Fellow. Zoe, great to have you on here. The goal of this policy from the Trump administration is to hurt China. Could it hurt the US first?
Oh, Zoe, we're having a bit of trouble hearing you. We might have to come back.
Can you hear me?
Perfect. I can hear you.
Yes, I can.
Go ahead.
Yeah, thank you very. Thank you Alison for having me. Um, first and foremost, the United States and China are still are remain to be very much interconnected. Rising tariffs on China on imported Chinese goods ultimately is going to hurt US consumers as well as US manufacturing activities because a lot of Chinese imported imported parts are inputs to manufacturing plants here in the United States. And for folks who are who intend to model remodeling their kitchens or or their their their homes, probably we are going to anticipate a price increase, not just in terms of home appliances, but also drywall and a whole host of other stuff.
And so, as we're thinking through what necessarily needs to take place, and what will be experienced by a consumer in both of these regions, what are the net impacts for what consumption may look like and how that will be ultimately rattled in the near term?
Brad, that is a very important, a great point in terms of consumption. I would say that Chinese exports or demand for imported Chinese goods here in the United States are very much tied to the broader macroeconomic situation in the United States, especially household income. If household income can catch up or even to the extent that it can offset price increases caused by tariff increase, perhaps the impact shock on imported Chinese goods in terms of consumer demand here in the United States may be slightly offset. But that is completely unsure, uncertain yet. And then on the Chinese side, the Chinese government has been promoting consumption plan or promoting expanding domestic demand at a household level for quite some time. But they are, they become very sincere, seems to have concrete plan as of the end of last year. In December, the government, the the party's central economic central finance conference talked a lot about concrete policies to boost policy boost domestic consumption. And this the same tone or the same mood was also happening during the National People's Congress as well as the China Development Forum, rather than focusing on the new productive forces, focusing on technological development, like last year this time, the focus is on concrete plans to promote domestic consumption. And I think the policymakers understand that China's export space rising protectionism, not just from the United States, but of developing countries as well.
Zoe, really great context and insights there. Thanks so much for taking the time here with us today. Zoe Liu.
Thank you.
