SCOTT SIMON, HOST:
This week, the trade war between the world's two top economies - the U.S. and China - spiraled into uncharted territory. Tariffs on imports in both directions shot up, even as President Trump hit pause on the so-called reciprocal tariffs that he'd planned to impose on other countries. The administration has now included an exemption for certain electronics, including computer monitors and cell phones. NPR's John Ruwitch joins us now from Beijing. John, thanks so much for being with us.
JOHN RUWITCH, BYLINE: Happy to be here.
SIMON: How did things get to this point?
RUWITCH: Well, it started with those reciprocal tariffs on Liberation Day. Trump imposed tariffs on countries from around the world, of course, and China was hit with a 34% levy. Beijing was less than pleased about it. So two days later, China matched that with a tit-for-tat 34% tariff on U.S. imports. Trump didn't like that. He added 50% on top of it. China responded with 50%. Trump added more. China responded. So at - by the end of the week, the base tariff on Chinese imports into the United States was 145%, and U.S. products entering China now get hit with a 125% tariff. It was a dizzying upward spiral, and these are crippling numbers.
SIMON: And a lot of people are certainly wondering - any end in sight?
RUWITCH: Yeah, there's no end in sight to the acrimony at the moment. But Beijing did something kind of interesting on Friday when they increased tariffs that last time to 125%. They said they were done playing the tit for tat game. With tariffs at that rate, they said U.S. products are no longer competitive in China. And if Trump continues to raise tariffs on Chinese goods, it would be a, quote, "joke," and China just wouldn't match them. Now, China's not going to roll over. Officials in Beijing said they will continue to protect their rights and interests. So perhaps it's a dual signal - you know, restraint on one hand on the tariffs, but also kind of a, don't mess with us, signal. Experts do say there does come a point, you know, when raising tariffs further just doesn't do anything. And these tariffs are already sky-high. Victor Gao is with the Beijing-based think tank the Center for China and Globalization.
VICTOR GAO: In my best judgment, it means China-U.S. trade will grind to a complete halt, meaning there will be no more trading between China and the United States.
SIMON: John, is that what you hear from companies and exporters, too?
RUWITCH: Well, there's a lot of confusion and caution now. Things have been moving at such a high speed. A few weeks ago, Morning Edition host Steve Inskeep was here. He went to a city called Yiwu, which is famous for trading, and talked to a woman there named Nicole Zhang, who sells hairpins and claw clips for the hair. We caught up with her.
(SOUNDBITE OF ARCHIVED NPR BROADCAST)
NICOLE ZHANG: (Speaking Chinese).
RUWITCH: So she's saying that she had an order from February, which she previously told us was for Target. The deposit still hasn't been paid on that. Everybody's just waiting to see what happens. She's putting on a brave face, though. She thinks this whole thing is going to be temporary.
SIMON: Will it be? I mean, do we know where we go from here?
RUWITCH: We don't. It's hard to imagine the world's top two economies not doing trade with each other. Trump says he's willing to talk and that China wants to do a deal but hasn't called him. China says it's open to talks, but they have to be conducted on the basis of mutual respect. And so it's unclear where things go from here. It doesn't seem like conditions are right for talks or a breakthrough. Maybe it'll take some economic pain from these tariffs before either side decides they want to get together and have these conversations.
SIMON: NPR's John Ruwitch in Beijing. Thanks so much, John.
RUWITCH: You're welcome, Scott. Transcript provided by NPR, Copyright NPR.
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