OAKLAND, Calif. (KTVU) - The president slapped a $60 billion tariff on a wide variety of Chinese imports as retaliation for its failure to stop the theft of U.S. Intellectual property such as software, designs and entertainment. Though the U.S. has valid gripes with Chinese theft of intellectual property, is the only way forward a massive trade war?
That is a critical question.
A lot of folks' retirement funds depend on Wall Street. Today, investors there, said loud and clear, they do not like the President's shot gun approach to putting stiff tariffs on a wide variety of Chinese products.
"There's definitely reason to be concerned that this is the opening salvo of a trade war," said Rufus Jeffris of the Bay Area Council, a consortium of the region's largest employers.
As Berkeley Economics Professor Barry Eichengreen says, a trade war will seriously affect the U.S. "They will retaliate by slapping taxes on our exports to China," said Eichengreen.
And, you'll be paying for it.
"The price is gonna go up but about 25 percent. The money goes to the Federal government," the professor said.
That would affect port operations along the entire West Coast and beyond. "Import commodities, coming primarily from Asia – pretty much everything you're wearing or everything you find in the household," said Mike Zampa of the Port of Oakland.
Much export trade, especially agricultural commodities, move through the Port of Oakland which directly supports 70,000 Bay Area jobs.
"Agricultural commodities: rice, nuts, dried fruit, meat, wine – all of these things are moving through the Port of Oakland to Asia with tremendous demand the middle class in Asia grows," said Zampa.
But, a trade war would go far beyond U.S. and California farmland. "The Bay Area and many companies here operate in a global economy. There's many connections with China that span the entire global economy. China is a very important trading partner for the Bay Area and many Bay Area companies," said Jeffris.
It could also stifle Chinese investment in Chinese companies here in the U.S. There’s more than 600 in California alone, plus tens of billions of dollars put directly into U.S. companies.
"The implications could be huge," said Jeffris.
Professor Eichengreen says U.S. tech companies who rely on China to assemble their products may well find that harder to do. Moving operations to the U.S. would be expensive and U.S. wages would force the prices up, if they can find the workers.