China’s threat to impose tariffs on U.S. crude oil, liquefied natural gas (LNG) and coal is possibly the only sign of clear thinking in the increasingly muddled escalating trade dispute with the administration of President Donald Trump.
The tariffs on energy imports were mooted by the Chinese on June 15 as part of their response to the U.S. announcement of tariffs on $50 billion worth of imports.
To be clear, the tariffs on crude oil and products, LNG and coal are still in the realm of the possible, and it will likely take a further deterioration in the relationship between the world’s two largest economies to turn them into a reality.
The Chinese threat to impose tariffs on energy imports makes sense from two perspectives. The first is that in economic terms it’s generally best to put tariffs on goods with high elasticity, in other words goods you can substitute relatively easily from other suppliers. Read More
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