Trump, tariffs and trade with China: What to know

President-elect Donald Trump has long been a champion of tariffs. Most recently, he pledged to place tariffs of 60% on goods imported from China.

Scott Kennedy, a senior adviser on Chinese business and economics at the Center for Strategic and International Studies, says Congress used to handle tariffs. But during Trump’s first term, he took on some of that responsibility himself. President Biden has also raised tariffs on a number of goods throughout his term.

“President Trump, when he comes into office, could go back to Congress to ask them permission to raise tariffs,” Kennedy says. "He could also just simply do it on his own using the previous investigations authority or starting a new investigation, or just saying that there's an emergency and new tariffs are needed.”

In Trump’s first term, you say that Beijing responded mildly to increased tariffs. You say the response could be stronger this time, though. Why?

“The Chinese could come back with not only tariffs; they could put restrictions on critical minerals and other high-tech Chinese products. They could devalue the renminbi. They could sell off U.S. treasuries. They could buzz Taiwan even more closely, and they could reach out to countries in the region and elsewhere to offer them goodies while they're punishing the U.S.

“If they did all of those things simultaneously, that would be quite different from what they've done before, and we would see markets be quite concerned about that, and they would also expect the U.S. then to up the ante again. We'd see an escalating tit-for-tat fight between the world's two largest economies.”

If this were to spiral into a trade war or economic war, what impact would it have on the American people?

“I think the most likely way that this would be initially felt is through increases in prices for products and services that folks buy in the supermarket in stores around the United States. There's a variety of goods that one can import from elsewhere that don't come from China or domestically, but there are many that you can't, and we're likely to see higher prices and mostly it's going to be folks in the middle-class, working class, that are going to take on the brunt of that pain.

“Then you're going to see financial markets potentially show greater anxiety. And so folks’ portfolios could take a hit, and you could see changes in energy market prices as well.  And it's possible that everyone will just ignore this as a fight between Beijing and Washington and just go about their day, but I think that's really the least likely scenario.”

What are the key things you'll be watching for that could suggest higher tariffs coming quickly? 

“We should be looking at who President Trump is appointing to his cabinet and what those folks have said about China and about these kinds of tools, and what the president himself says about China, and also where it ranks in the order of priorities.

“He's got a long to-do list that he's developed over the course of the campaign regarding immigration, regarding taxes, Ukraine. Where does China fit in that picture? Is it at the top of the list? Is at the bottom of the list.

“What do we see how the Chinese are talking about this? Are they talking like wolf warriors? Or are they talking in more calm language? Are they focused on expanding ties with their allies and keeping calm? I think those are the kinds of things I'd be looking for.

“We will see President Biden and Chinese leader Xi Jinping at the [Asia-Pacific Economic Cooperation] summit in just over a week, and we will get a taste of what the U.S.-China relationship looks like.”