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Trump’s trade war with China escalates, threatens another $200 billion in tariffs

In Trump’s world, he can tariff other countries, but they can’t respond in kind

Asian markets are taking a hit as Trump announces that he intends to expand the list of tariffs on Chinese exported goods. Trump continues to slam China over the trade deficit between China and the US and his displeasure with Chinese countermeasures to tariffs that he has imposed on them. Apparently, in Trump’s world, he can tariff other countries, but they can’t respond in kind.

Associated French Press reports:

Beijing on Tuesday accused Donald Trump of “blackmail” and warned it would retaliate in kind after the US president threatened to impose fresh tariffs on Chinese goods, pushing the world’s two biggest economies closer to a trade war.

Trump said on Monday he had asked the US Trade Representative to target $200 billion worth of imports for a 10 percent levy, citing China’s “unacceptable” move to raise its own tariffs.

He added he would identify an extra $200 billion of goods — for a possible total of $450 billion, or most Chinese imports — “if China increases its tariffs yet again”.

“Further action must be taken to encourage China to change its unfair practices, open its market to United States goods and accept a more balanced trade relationship with the United States,” Trump said in a statement.

Last week, he announced 25 percent tariffs on $50 billion in Chinese imports, prompting Beijing to retaliate with matching duties on US goods.

The US leader warned Friday of “additional tariffs” should Beijing hit back with tit-for-tat measures.

“The trade relationship between the United States and China must be much more equitable,” he said in explaining his latest decision.

“I have an excellent relationship with President Xi (Jinping), and we will continue working together on many issues. But the United States will no longer be taken advantage of on trade by China and other countries in the world.”

China’s commerce ministry immediately responded by saying the US “practice of extreme pressure and blackmail departed from the consensus reached by both sides during multiple negotiations and has also greatly disappointed international society”.

“If the US acts irrationally and issues a list, China will have no choice but to take comprehensive measures of a corresponding number and quality and take strong, powerful countermeasures.”

The news hit stock markets in Asia, where Shanghai shed three percent in the morning, Hong Kong lost more than two percent and Tokyo was one percent lower.

Trump is moving forward with the measures after months of sometimes fraught shuttle diplomacy in which Chinese offers to purchase more American goods failed to assuage his grievances over a widening trade imbalance and China’s aggressive industrial development policies.

China had offered to ramp up purchases of American goods by $70 billion to help cut its yawning trade surplus with the United States, whereas Trump had demanded a $200 billion deficit cut.

– ‘Unacceptable’ –

The China trade offensive is only one side of Trump’s multi-front battle with the United States’ economic partners as he presses ahead with his protectionist “America First” agenda.

Since June 1, steel and aluminium imports from the European Union, Canada and Mexico have been hit with tariffs of 25 percent and 10 percent, respectively.

“This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods,” Trump said of China’s retaliatory tariffs.

“This is unacceptable.”

Two decades ago, China’s economy was largely fuelled by exports, but it has made progress in rebalancing towards domestic investment and consumption since the global financial crisis erupted last decade — limiting the damage trade tariffs could inflict on Beijing.

Still, strong exports this year have lifted the economy, which is now showing signs of losing steam under the weight of Beijing’s war on debt, launched to clean up financial risks and rein in borrowing-fuelled growth.

Initially, 545 US products valued at $34 billion will be targeted by China, mimicking the Trump administration’s tariff rollout.

Beijing wants to “demonstrate that things will be done their way or not at all,” said Christopher Balding, an economics professor at Shenzhen’s HSBC Business School, who believes Chinese policymakers prefer demonstrations of “power and control” over “technical policy rightness.”

“It is a game of chicken,” Balding said.

So far Beijing has targeted major American exports to China such as soybeans, which brought in $14 billion in sales last year, and are grown in states that supported Trump during the 2016 presidential election, as well as other politically important products.

Officials also drew up a second list of $16 billion in chemical and energy products to hit with new tariffs, though China did not announce a date for imposing them.

More American targets are likely to follow as soon as the Trump administration follows through with publishing an expanded tariff list.

With China’s commitment to stay abreast of the ongoing tariffs war, it will produce a tariffs list of a corresponding dollar amount of goods coming out of the US, which Trump declares will also be met with a response. At this point, regardless of Trump’s ‘excellent relationship’ with Chinese President Xi, he is setting up an all out economic war with his largest trade partner by continuously upping the ante, which doesn’t bode well for US diplomacy in the region, either.

 

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JNDillard
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JNDillard

This is all good. It forces China to focus on more quickly and completely insulating itself from both trade wars and sanctions by the US by further developing its internal economy and building stronger trading relationships with other countries. I suspect it will find plenty of customers in the EU who will be looking to do the same.

Daisy Adler
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Daisy Adler

American soybeans, apples, cherries, some vehicles and pork are already on China’s tariff hit-list.China could also add soon US oil and propane. It also can cut down their holding of US Treasury bonds , actually standing at $1.2 trillion. Last month, China reduced it by $5.8 billion, while Russia sold half of its dollar bonds, down to $49 billion. By comparison, in 2013 Russia had $140 billion invested in US debt.

Guy
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Guy

Let the games begin ! The US better have an ace in the hole to save their proverbial a$$ as they are alienating everyone they trade with .

Kubrickian
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Kubrickian

They need our agriculture and we don’t need their plastic crap or tech that is inferior to Japan, Korea, and even Taiwan. China needs American consumers to keep their economy afloat.

Daisy Adler
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Daisy Adler

The real US-China trade relations: “Exports from China (to the rest of the world) increased by 12.6 percent year-on-year to USD 212.87 billion in May 2018 … Among major trading partners, exports rose to the US (11.6 percent to USD 39.3 billion) …” https://tradingeconomics.com/china/exports “US goods exports to China continue to outpace export growth to the rest of the world. In 2017, the United States exported more goods to China than ever before, more than $128 billion. US exports of goods to China have grown by 86 percent over the last decade, while exports to the rest of the world… Read more »

Ole C G Olesen
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Ole C G Olesen

If President TRUMP .. would like to TARGET THE REAL CULPRITS causing the TRADE and BALANCE of PAYMENTS DEFICIT of the USA.. he should start with the AMERICAN MULTINATIONAL CORPORATIONS .. who out of PROFIT HUNGER have OUTSOURCED USA MANUFACTORING JOBS to CHINA and to many other LOW WAGE COUNTRIES …. but I doubt he dares to do that

Cheryl Brandon
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Cheryl Brandon

Do not forget to read this very insightful article from 1927

https://www.metabunk.org/debunked-america-was-sold-to-5-billionaires-in-1927.t7371/

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