When President Trump recently met with the President of the European Commission, there was some relief in the investment markets. Some believed that we were approaching the end of the trade disputes that have dominated the political landscape this year. This, unfortunately, doesn’t appear to be the case. The president now wants to implement new tariffs of 25% on $200B of Chinese goods.

Why Is the White House Continuing to be Aggressive on Chinese Trade?

It’s arguable that without tariffs, the White House would not have been able to convince the E.U. to start talking about new trade arrangements.

President Trump’s strategy has been to pressurize trade partners into renegotiating. Whether or not that has worked is still up for debate. Although the President had a positive meeting with the European Commission president in Washington recently, there were very few concessions made by the E.U. The best that President Trump got out of the meeting was an agreement that the E.U. would purchase more U.S. soybeans and explore the possibility of buying U.S. gas products.

Many saw it as a win for the White House, but we will have to wait longer to see the actual economic impact of the meeting.

With China, the President is taking a similar approach. Despite trying earlier this year, the White House and Chinese diplomats could not come to any new trade agreements. This led to a tit-for-tat tariff exchange, before a period of relative ease in the last month.

This latest announcement from the White House is an indication that President Trump and his staff see no option but to continue to put pressure on China. Trade officials believe that the U.S. has the upper hand and can afford any negative impact of a prolonged trade disagreement.

More Tariffs Might Not be Pretty for Investors or Producers

Tariffs might not hurt the economy but can be crippling for small and mid-sized producers. Soy bean producers were hit hard by retaliatory Chinese tariffs, as were farmers.

A significant number of U.S. consumer electronics are produced in China, and a new round of tariffs could also end up causing trouble for companies like Apple, NVIDIA, Qualcomm, and Broadcom.

Investors will want to keep track of this news, as any decision from the White House could have a direct impact on the strength of the stock market. No decision is expected until September.