Stock markets are tumbling and economists are edgy as talk of a trade war dominates the news.
China is threatening to hit back against planned US tariffs, saying it is "absolutely not afraid" of the consequences.
What is a Trade War?
A trade war is when a nation or country imposes tariffs on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade. This can hurt other nations' economies and lead to rising political tensions between them.
What is a Tariff?
Tariffs are generally introduced as a means of restricting trade from particular countries or reducing the importation of specific types of goods and services.
In theory, taxing items coming into the country means people are less likely to buy them as they become more expensive.
The intention is that they buy cheaper local products instead - boosting your country's economy.
Trade War on HOLD
Donald Trump proves Trade War with China are Good and Easy to win.
Washington and Beijing both claimed victory as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.
The trade war that Donald Trump threatened against China in March has not just been placed on hold – although official statements suggest so – it is for all intents and purposes over. And not a moment too soon. As early as June 2018, an action-reaction cycle of tariff increases involving more than US$100 billion of bilateral trade and aggravated investment restrictions could have broken out that would have counted global economic victims far beyond America and China’s shores.
Secretary of the Treasury Steve Mnuchin, says the administration expects to see “35 to 45% increases in agriculture this year alone. In energy, doubling the energy purchases.”
Earlier President Trump threatened to impose $150 billion in tariffs against China for intellectual property theft.
The Republican leadership has announced the House of Representatives will vote again on the House farm bill no later than June 22 after the House considers immigration legislation.