The United States and China are not in an all-out trade war, but they're getting closer to it. That's why the stock market tumbled Wednesday morning and soybean farmers are panicking.
On a grand scale, the latest development is unlikely to send the U.S. economy into a recession. Growth is strong and China has only threatened $50 billion tariffs on U.S. goods. Such tariffs haven't taken effect, but even if they do, they are minuscule in relation to the United States' $18 trillion economy — 0.3 percent to be exact.
Certain parts of the United States — especially Illinois, Indiana, Iowa, Kansas, Minnesota and Washington — will feel it acutely. And more Americans will get hurt the further the brinkmanship goes, especially if the stock market sell-off ends one of the longest bull markets in U.S. history.
Here's a quick recap of what happened in the past 24 hours: On Tuesday evening, the United States announced its intent to put 25 percent tariffs on 1,300 Chinese imports. The tariffs wouldn't take effect until late May at the earliest, but the message to China was clear: President Trump wants China to buy more U.S. stuff and do a better job of protecting U.S. intellectual property.
China, normally known for “measured” responses in its trade dealings, fired back Wednesday with a gut punch to Trump, saying it intends to put 25 percent tariffs on the top goods the United States exports to China: airplanes, soybeans and cars. The United States' tariff list was full of a lot of products, mostly parts of machines, that are traded on a smaller scale. But China is taking aim at key U.S. industries, and two of them — soybeans and cars — are concentrated in states Trump won.
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