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Is Trump about to start round 2 of the trade war with another US$100 billion of tariffs?

President Donald Trump has said he could add a further US$100 billion of tariffs onto China, which would be in addition to the US$50 billion he has already committed to implementing.

The leader of the United States said that he was responding to the unfair retaliation from China which has created its own list of American products that will be hit by tariffs like pork and soybeans.

Mr Trump said “Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers”. He has tasked US trade representatives to decide if another US$100 billion were necessary and, “if so, to identify the products upon which to impose such tariffs.”

This whole debacle was started because President Trump believes China is being unfair with access to the Chinese market and also being unfair with US intellectual property, President Trump said that there was still time for discussions with China “to protect the technology and intellectual property of American companies and American people.”

This seems like a very dangerous game for President Trump to play. He might be trying to protect American interests but it doesn’t seem like the Chinese are going to back down. Indeed, they are threatening tit-for-tat tariffs each time.

President Trump’s core base seems to be the most risk because a lot of the products the Chinese are threatening to put tariffs on are produced by states that voted for the Republican man.

Australia (and other western countries) are also at risk from this trade war. Australia is in a particularly difficult position because we are politically allied to the US but economically tied to China more than any other country.

Foolish takeaway

The US share market could take another dive later today and it wouldn’t surprise me if our share market finished the day in the red. Indeed, some American-linked ASX shares are already down today with Altium Limited (ASX: ALU), James Hardie Industries plc (ASX: JHX) and CSL Limited (ASX: CSL) down 2.63% and 1.39% and 1.26% respectively.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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