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February 4, 2025

Trade war focus shifts to China as uncertainty persists

Shipping containers Photo / Adobe Stock After new U.S. tariffs took effect in China, the Asian country retaliated with targeted countermeasures.

With a 30-day pause on tariffs on Canada and Mexico, the trade war focus now shifts to China.

After a 10% tax on goods imported from China took effect on Tuesday, the Asian nation responded with targeted countermeasures, including additional tariffs on U.S. liquefied natural gas, crude oil and farm equipment.

The U.S. imported around $448 billion worth of goods from China in 2023, led by electric and electronic equipment and toys and games, according to the latest data from Trading Economics.

A wider trade war could push up prices at stores even at discounters like Renys, a family-owned retailer headquartered in Newcastle with 18 stores in Maine.

“We don’t import very much, just a few items, but everything we buy is from somebody else who probably imports to the U.S., so they’re eventually going to charge more for it,” John Reny, the company's president, president, told Mainebiz in a Monday phone interview.

He also said that while Renys tries not to raise prices even when goods become more expensive, “sometimes when you get a second increase you’ve got to do something.”

Curtis Picard, president and CEO of the Maine Retail Association, said that while it's too early to assess the potential impact on the retail sector, supply chains are complex and that it's not always easy to find replacements on short notice.

"Remember during early COVID, and there were shortages of toilet paper?" he said. "Then you ended up seeing some unfamiliar or foreign name brands on the shelves while supply chains adjusted and caught up. I think there could be similar situations here."

Fluid situation

The politcal situation remains fluid, with President Donald Trump saying he planned to speak with the Chinese leader Xi Jinping this week without saying when those talks will take place.

The next 30 days will also be critical for U.S. relations with Mexico and Canada, the country’s two biggest trading partners, following an interim truce on tariffs. Trump has also threatened to impose tariffs on the 27-nation European Union and refused to rule out military force to take control of Greenland, an autonomous territory of NATO ally Denmark.

Amir Mousavian,  an associate dean at the College of Business at the University of New England, said the temporary truce with Mexico and Canada highlights how tariffs are being used as a negotiation tool rather than a permanent trade policy.

"While tariffs can serve as leverage to pressure other countries into concessions, their unpredictability disrupts supply chains and creates short-term economic instability," he noted. "That said, I still believe this will not be a prolonged issue, and with time now available for renegotiation, a resolution is likely — and hopefully — within reach."

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