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Containers are stacked on a vessel at the Port of Long Beach in Long Beach, California on July 6, 2018, including some from China Shipping, a conglomerate under the direct administration of China’s State Council.
Frederic J. Brown | AFP | Getty Images
The United States may be feeling the pain of tariffs now, but they will hurt China in the longer term, said former Goldman Sachs CEO Lloyd Blankfein.
“Tariffs might be an effective negotiating tool,” Blankfein said in a tweet Tuesday evening New York time. “Saying it hurts us misses the point. China relies more on trade and loses more.”
Trade tensions between the world’s two largest economies escalated in the last week. U.S. President Donald Trump‘s administration raised tariffs on $200 billion worth of imported goods from China to 25% from 10%. In response, Beijing retaliated with duties of up to 25% on $60 billion worth of U.S. goods.
In a separate tweet Tuesday, Blankfein said tariffs may cause U.S. buyers to switch their purchases to local or non-Chinese companies. Although that will cause the American side to pay slightly more than they do now, he pointed out that as a result, Chinese companies will lose revenues.
“Not great but part of the process to assert pressure to level the playing field,” he said.
While the U.S. has a host of demands for China around creating a fairer business environment, Trump has focused on reducing the U.S. trade deficit with China. The U.S. is the Asian giant’s largest trade partner.