Trade War Turns Serious

Trade War Turns Serious

Accusing China of not negotiating “seriously” on trade, the Trump administration has released a list of products it wants to impose a ten percent tariff on, amounting to $200 billion. The new tariffs would kick in within 60 days.

The 200-page document, released on Tuesday by the US Trade Representative’s office, gives notice to those who wish to comment on the proposal and lists hundreds of products that would be subjected to the new tariffs. The Trump administration intends to impose a ten percent duty on the products listed, Reuters reported, citing US Trade Representative Robert Lighthizer.

The Retail Industry Leaders Association (RILA) was quick to condemn the proposal, saying it will punish American consumers.

“The President has broken his promise to bring ‘maximum pain on China, minimum pain on consumers,’ and American families are the ones being punished,” Hun Quach, RILA VP of international trade, said in a statement. “Consumers, businesses and the American jobs dependent on trade, are left in the crosshairs of an escalating global trade war.”

Senate Finance Committee chair Orrin Hatch (R-Utah) also took aim at the announced list, saying it “appears reckless and is not a targeted approach.”

“We cannot turn a blind eye to China’s mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy,” Hatch said in a statement.

The Senate intends to vote on Wednesday on a nonbinding measure that would insert provisions requiring Congressional approval of tariffs into water and energy “minibus” spending bills, Senator Jeff Flake (R-Arizona) told Bloomberg.

US tariffs of 25 percent on $34 billion of Chinese imports went into effect on July 6. Beijing has retaliated with duties on the same value of US imports, ranging from soybeans to cars, and has vowed to respond proportionally to any new US tariffs.

Last week, President Donald Trump said the US might ultimately impose tariffs on more than $500 billion worth of Chinese goods, almost the total amount of US imports from China last year.

China’s Commerce Ministry has said that Beijing has no choice but to fight back after the US “launched the largest trade war in economic history,” accusing Washington of violating the rules of the World Trade Organization (WTO).

Trump has campaigned on the claim that trade partners are taking advantage of Americans due to “terrible deals” made by previous US presidents. His determination to renegotiate trade deals has targeted not only competitors on the world market such as China, but longtime friends and allies such as the EU or Canada.

“Sometimes our friends, when it comes to trade, are treating us worse than the enemies,” Trump said at a press conference on June 29.

His administration has already imposed tariffs on aluminum and steel imports from the EU, Mexico and Canada at the end of May, prompting Ottawa to retaliate in kind against some US exports.

The trade confrontation between Washington and Beijing has been escalating for months, despite Trump’s repeated statements that he has a good relationship with China’s President Xi Jinping.

China accused the US of starting “the largest trade war in economic history,” after the first round of tariffs took effect last week.

But Trump has said continuously that China has taken advantage of the US economy, and he has vowed to hit nearly all the country’s products with tariffs, as much as $450 billion.

The US trade deficit in goods with China ballooned to a record $375.2 billion last year, stoking his anger over trade policies.

For now, the USTR continues to work on the process of finalizing an additional $16 billion in goods to face 25 percent tariffs to bring the total up to $50 billion. Beijing has vowed to retaliate dollar-for-dollar.

The new list of goods to face 10 percent punitive duties includes frozen meats, live and fresh fish and seafood, butter, onions, garlic and other vegetables, fruits, nuts, metals, and a massive list of chemicals, as well as tires, leather, fabrics, wood and papers.

The officials said they tried to target goods that would reduce the harm to US consumers.

They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory.

“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said. “Unfortunately, China has not changed its behavior.”

But he added that “the United States is willing to engage in efforts that could lead to a resolution of our concerns.”

 

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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One Response to "Trade War Turns Serious"

  1. Paul Ebeling   July 10, 2018 at 10:17 pm

    The Chinese will fade Mate! Have a happy day. Paul

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