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A stand off between the U.S. and China is making headlines on both sides of the Pacific. That's the first subject we're explaining today, I'm Carl Azuz. It's good to have you watching.
Tariffs, additional taxes, are kicking in on many of the goods that the United States imports from China. The two countries have been holding meetings and negotiations for months. But after they failed to reach a trade deal last week, the new U.S. tariffs took effect. And the U.S. government expects China will retaliate with tariffs of its own as China has said it would.
Why is this happening? There's a trade deficit between America and China. The U.S. imports more goods from China than it exports to China and that's something that U.S. President Donald Trump has called unacceptable. He also says China hasn't been fair in its trade practices. After the two countries issued back and forth tariffs on each other's goods last year, they held a series of talks to try to reach a solution. But when a deal wasn't reached last Friday, the U.S. government raised its tariff rate from 10 percent to 25 percent on about $200 billion worth of Chinese goods.
Why did the talks break down? The U.S. government says China went back on promises it made earlier in the negotiations. China says it hopes the U.S. will meet it halfway and resolve their differences through cooperation. What happens next? Well in addition to the question about how and when China will respond is the question about how much the new tariffs will effect the world's two biggest economies.
President Trump's top economic advisor says U.S. economic growth would see an impact, but that it would be very small and that the improved trade deal that's possible would make the consequences worth while. Still, the government does expect that both countries would feel a pinch.
