Trump Threatens Tariffs on $200B in Chinese Goods

Jeannie Matthews
June 22, 2018

United States light crude oil hit a two-month low of US$63.59 a barrel before recovering somewhat to trade at US$64.72, down 30 cents, by 1100 GMT.

The flags of the US and China hang outside of 85 Broad Street, headquarters for the investment bank Goldman Sachs in New York, October 23, 2008.

"As I've said from the beginning, China will back off its industrial plans only when U.S. trade measures are large and lasting enough to threaten the influx of foreign exchange", he said.

Trump threatened to pursue additional tariffs on another $200 billion worth of goods if China increases its tariffs yet again. But if trade relations get worse, it could be much less politically appealing for the US and China to collaborate on North Korea. "Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent". "President Trump has given China every chance to change its aggressive behavior".

The Chinese retaliation pattern shows that China intends to follow Donald Trump with "equal scale and equal strength" on every move he takes against China. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong". The prediction is that, with the initial tariffs on $50bn of goods from both sides, the impact across the US economy as a whole, net employment will fall by 134,000.

On Wall Street, the Dow Jones Industrial Average closed down 1.1% on Tuesday. USA companies, from Caterpillar to Qualcomm, would likely face obstruction from regulators in China, a market they rely on for an outsize share of sales. Boeing's stock shed 3.6 percent, Caterpillar 3.7 percent and GE 1.7 percent.

"If the United States loses its senses and comes up with a new list, China will be forced to strike back hard, and launch comprehensive measures that match the USA move in quantity and quality", the Chinese Commerce Ministry said in a statement Tuesday.

"Faced with this heightened intimidation from the U.S., China has no choice but to fight back with targeted and direct measures aimed at persuading the back off, since it appears that any concessions it makes will not appease the Trump administration, which wants to suck the lifeblood from the Chinese economy", the newspaper said.

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"Time is running out for China to continue its reform process", Harborn said, noting 2018 must be the year Beijing acts. -China Business Council. Parker suggested that such steps might include delaying or denying licenses required by US companies in China.

Although not part of the US-China trade spat, Europe is looking fragile as growth has already slowed and the fiscal policy is less of a support compared with the US.

Apple has a lot at stake because it builds most of its devices in China and also has a thriving business selling gadgets in the world's second-largest economy. This example highlights that any imposition of tariffs on Chinese goods will not only impact the Chinese economy. A punitive duty the Trump administration applied to lumber imports from Canada has raised the price of a new home by $9,000, according to the National Association of Home Builders.

Shares of Chinese companies listed in the US slumped. At the same time, China pulled back from the deal made with the United States on 21 May, which, among other things, involved buying more USA products worth USD70bn.

USA politics may restrain Trump. While in beginning a vague consensus was reached whereby Beijing pledged to increase its purchases of American products, this once-faded Trump commitment returned to charge with charges affecting high-tech Chinese products whose value It amounts to 50 billion dollars, rates that will enter into force on 6 July.

The Deutsche Bank economists Brett Ryan, Peter Hooper, and Matthew Luzzetti found that the tariffs introduced by Trump could push up inflation and result in a drag on economic growth. They included tariffs on steel and aluminum imports and a combative stance on trade negotiations from North America to Asia.

It seems like it's getting harder and harder to keep the ongoing nuclear talks with North Korea from getting caught up in a brewing trade war between the USA and China.

Trump said on Tuesday the two nations had a good relationship and could work out a trade agreement on their own.

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