China hits back at U.S. tariffs

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What is the main focus of the episode on April 10th?

Shumita Basu 0:05
Good morning. It's Thursday, April 10th. I'm Shamita Basu. This is Apple News Today. On today's show, a change to a longstanding IRS rule, why the State Department is revoking visas for hundreds of international students in the U.S., and the Masters marks a historic anniversary.

How did Trump change his stance on tariffs?

Shumita Basu 0:34
But first, President Trump abruptly reversed course on widespread global tariffs yesterday in the face of forecasts of a potential recession, pushback from the business community, and growing discontent among some Republican members of Congress. Here's how the president put it.
Donald Trump 0:49
People were jumping a little bit out of line. They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.
Shumita Basu 0:58
Now Trump says he's instituting a 90-day pause for most countries while retaining a baseline tariff of 10 percent. The exception? China. Instead of pulling back, Trump doubled down, now saying China will face a 125 percent tariff, a jump up from where he was just two days ago when he promised tariffs of 104 percent. This comes after China, the world's second largest economy, didn't bend to Trump.

What is China's response to Trump's tariffs?

Shumita Basu 1:23
Instead of calling up the White House and offering concessions, China retaliated, increasing tariffs on all U.S. imports to 84 percent.
Chinese leader Xi Jinping has been preparing for this moment for many years.
Shumita Basu 1:37
Lingling Wei is the chief China correspondent for The Wall Street Journal.

How is China preparing for economic sanctions?

So ever since Trump left office, Xi Jinping has tried to build up this arsenal of retaliatory tools. And not only that, he has doubled down on central control over China's economy. China has invested so much more in high tech, in industrial capabilities and all that. Basically, the goal is to fortify the economy against potential sanctions from the United States.
Shumita Basu 2:09
Part of that fortification, according to Wei, also has to do with Chinese export controls. In the same way that the U.S. has restricted China's access to high-tech, like semiconductors, China is employing a similar tactic for U.S. access for certain products.
It's not high-end semiconductors or other stuff. It's really things like rare earth minerals, the kind of components that U.S. companies need to use in order to make trips, in order to make defense-related products.
Shumita Basu 2:42
China is also obstructing deals that could be beneficial to the United States. For example, a recent merger between Intel and an Israeli chipmaker fell through because Chinese authorities dragged their feet on approval. And China has a rule not dissimilar to a rule the United States has that allows it to restrict U.S. companies from doing business there if it deems them harmful to China's national security interests.
They have a lot of incentives, a lot of reasons to project strengths as opposed to, you know, project weakness. So that's why we are seeing that Xi Jinping is standing very firm. He's not calling President Trump. He's not, like other countries, trying to negotiate with Trump because he feels like we cannot do this under such maximum pressure. That would make us look weak. Because politically speaking, looking weak would be very costly for authoritarian leadership.
Shumita Basu 3:41
With neither country seeming willing to give in, Wei says the world is watching the two largest economies effectively playing a game of chicken. Whichever has less tolerance for economic pain is the one we could see bend first.
Shumita Basu 4:03
The Department of Homeland Security and the IRS have reached an agreement to provide sensitive taxpayer information to federal immigration officials, according to recent court filings. That will allow the IRS to learn more about immigrants living in the U.S. without legal status.
The IRS has very strict privacy regulations. It's not supposed to share information about taxpayers.

Why is the IRS sharing taxpayer data with DHS?

Shumita Basu 4:26
Washington Post reporter Shannon Najmabadi spoke to us about the change in policy.
What critics of this potential deal had said is that this contravenes the IRS's longtime promise that if you pay your taxes and you are undocumented, we're not going to turn around and give your information to other agencies that could then use it to deport you.

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