China announced Friday it was preparing to add $75 billion in tariffs on U.S. products, the latest round of levies in an escalating trade war between the world’s two largest economies. President Donald Trump responded with several angry tweets including one that “American companies are hereby ordered to immediately start looking for an alternative to China.” He also said he would raise tariffs on Chinese goods another 5% and called his own Federal Reserve Bank chairman an “enemy.” The stock market plunged after the tweets.
Class discussion: Do you understand how tariffs work? How are these taxes collected? Who actually ends paying for the tariffs? Why are the United States and China engaged in a trade war - continually raising tariffs on each others’ goods? Can the president force companies to stop trading with China? Is a trade war “easy to win” as the president once said? Why did the stock market drop sharply after the announcements? Is the trade war hurting the economy? Did the raising tariffs make the Great Depression worse?