Likely impact of US-China trade war: Prices up, growth down
OAKLAND, Calif. (KTVU/AP) - At the Port of Oakland, towering stacks of containers moving on and off ships bode well for business, but Port officials say there is concern that the U.S. tariffs on Chinese imports imposed Friday could threaten their bustling trade.
"China is the largest trading partner with the Port of Oakland and our exporters and importers are concerned about the potential effect of a trade war," said Mike Zampa, the Port of Oakland Communications Director.
The Trump administration imposed tariffs of 25% on some $34 billion in Chinese imports starting at midnight Friday.
China is warning that it's prepared to impose its own 25% retaliatory tariffs on 545 U.S. products such as California wine, meats, nuts and agricultural products.
"This could especially hit California growers. In the last five years, agricultural exports from Oakland to Asia have grown 40 or 50%. Phenomenal growth," said Zampa, "There's concern now if there are retaliatory tariffs coming from China on wine, nuts, fruit and meats the business for our growers is going to diminish."
Some economists warn that an all-out trade war would put the brakes on the U.S. economy by eroding business confidence, interrupting supply chains and increasing costs of imports to U.S. companies and consumers.
Mark Cohen, director of the Berkeley Center for Law and Technology and an expert on China, says this all started as a dispute over accusations of Chinese theft of intellectual property, but the Trump administration has expanded and escalated it.
"We're here because President Trump says China is stealing our intellectual property," said Cohen, "We plan on imposing tariffs equivalent to what we believe was the harm caused to us by reason of intellectual property theft."
Cohen says while China does export more to the U.S., the United States could lose in other ways.
"There's areas where China has very competitive technologies that maybe we're collaborating on and the Chinese may say we'll do it with the Europe or Japanese or go it alone."
Cohen says there is a danger, that this could be a long and drawn out conflict. If so, that could hurt many ordinary workers.
"Historically whether it's a trade war or a physical war, people go into it thinking it's going to be short-lived," said Cohen, "China wants to have an innovative economy. The U.S. government is afraid China is pursuing this in an unfair way. It's very hard to see how China's leadership is going to give up on this five year plan. We're not going to pursue this industrial policy. It's very hard to see this happening in the current environment."
Ironically, Cohen says the victims of Chinese IP or intellectual property theft won't benefit from the tariffs.
"People who had their trade secrets stolen, for example, or find it difficult to enforce patents. They're not going to be getting a percentage of the duties. This is intended to effect change in China, not necessarily to remedy the victims," said Cohen.
"More than 70,000 jobs depend on the Port of Oakland. That's everything from truck drivers to railroad crews to warehouse people, to the people who drive the burrito and hamburger trucks that go through the port serving people," said Zampa.
Trump discussed the trade war Thursday with journalists who flew with him to Montana for a campaign rally. The president said U.S. tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.
After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional $200 billion in Chinese imports -- and then $300 billion more -- if Beijing refuses to yield to U.S. demands and continues to retaliate.
That would bring the total of targeted Chinese goods to potentially $550 billion -- more than the $506 billion in goods that China actually shipped to the United States last year.
Associated Press contributed to this report