USA vs China: Donald Trump's tariff turnaround causes confusion

702 and CapeTalk's Africa Melane speaks to Charles Adams of the Economics Department at the University of the Western Cape.

Listen below:

The latest in the rollercoaster of economic decisions by US President Donald Trump is an announcement that he will temporarily suspend the hefty tariffs imposed on most countries while slapping a much higher tariff on Chinese goods.

"Trump believes that the US is unfairly importing in larger amounts from other countries than they are getting to export to other countries... he wishes to 'rebalance' trade with the rest of the world."

- Charles Adams, University of the Western Cape

As Adams explains, these import and export taxes are going to affect American consumers as much as the rest of the world, which has been explained as 'short-term pain' for those affected in the US.

However, the latest turnaround seems to have spared everyone except China - so what does this mean for global trade, local economies, and everyday consumers?

"It would mean significantly higher costs for certain goods from China, for US consumers. It will also mean a likely escalation in this 'trade war' from China's side..."

- Charles Adams, University of the Western Cape

It seems China is unlikely to back down to Trump's 'bullying' tactics, and has already responded with reciprocal tariffs.

Adams says that Trump seems to believe that the Chinese companies that export to the USA are willing to absorb many of the costs of the tariffs and that US consumers won't be too affected.

However, if trade decreases between the USA and China, what does this mean for the rest of the world?

"I agree that the tariffs will have a significant effect on the global economy if it continues... if this trade war doesn't abate in the near term. It will also have a significant effect on trade relationships across the world... countries will have to seek different high-level trading partners."

- Charles Adams, University of the Western Cape

Adams also tackles a question about whether this is all just market manipulation.

Scroll up to the audio player to listen to the discussion.