Some of the tariffs will be canceled out by a strong dollar.

The US announced a 10% tariff on a further $200 billion worth of Chinese imports into the US. In retaliation China announced tariffs on $60 billion worth of US products which means that China has now increased tariffs on almost all goods imported from the US. US President Donald Trump accused China of trying to influence US midterm elections in November by targeting his supporters. "China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me," he wrote. "There will be great and fast retaliation against China if our farmers, ranchers and/or industrial workers are targeted." Opponents of Trump claim that tariffs will result in a rise in prices which will hit ordinary people. "At a time where wage growth has been pretty limited, every dollar counts and price inflation means fewer dollars consumers have left to spend somewhere else," said G McBride. But a 10% tariff will not translate to a 10% rise in prices because the Chinese currency the renminbi has fallen over 5% in value since April. The renminbi strengthened to 6.491 to the dollar earlier this year but is trading at 6.85 today. The US Federal Reserve has been raising its Funds Rate slowly, the last raise being in June. It signaled another 2 rises this year but did not raise rates in its last meeting in July Rising rates will strengthen the dollar further against all other currencies, including the renminbi. So price rises due to tariffs will be muted but the government will collect a lot more in taxes. The unemployment rate is down to 3.8%, which signifies that anyone who wants a job will find one. This means wages are likely to rise as companies deal with a shortage of workers. Rising wages and a strong dollar will compensate somewhat for the rise in prices of imports because of tariffs. A booming US economy is not good news for emerging markets as their currencies fall, as investors sell their bonds and stocks, wrote E Curran and L Meakin. A sentiment that was echoed by R Sharma. "The dollar is extremely strong and any country running a current account deficit is getting penalized, Turkey being the most extreme example." "If you look at the current account deficit of India and many other countries since 2013 when the taper tantrum happened, they have improved. But, whenever we have had a strong dollar, it has never been good for developing economies like India." Increasing strength of the dollar and the rising price of crude oil has hit the Indian rupee very hard. Indian politicians and economists think that India is a closed economy but a current account deficit of 3% and a combined fiscal deficit of 7%, between the center and the states, is bound to have a negative effect, wrote J Aziz. Trump is continuing with his policies despite enormous criticism. Probably because he knows that tariffs will not cause much inflation.