Trump poised to make major China trade announcement

18 September, 2018, 11:12 | Author: Gerard Cortez
  • Larry Kudlow REUTERS  Kevin LamarqueMore

Apple Inc. said last month the proposed duties on $200 billion cover a wide range of products used in its United States operations.usa stock futures edged lower, Asian equities slumped and European shares fluctuated amid investor concerns a heightened trade war will crimp corporate profits and undermine economic growth.

The effect of the 10 percent tariffs will gradually show up in China's fourth-quarter data, and the full impact of the total 25 percent tariffs is expected to be felt next year, dragging down China's gross domestic product (GDP) growth rate by 0.83 percentage point, Citi analysts wrote in a note. The rand has fallen almost 10 per cent since the previous Monetary Policy Committee meeting in July and while the Reserve Bank does set a target level for the currency, the likely impact of the rand's decline on inflation could prompt the bank to lift the country's interest rate.

In response to President Trump's threatened tariffs, Beijing has teed up tariffs of five to 25 percent on $60 billion of U.S. goods including pig hides, cocoa butter and condoms. The administration is targeting a bewildering variety of products - from sockeye salmon to bamboo mats - forcing US companies to scramble for suppliers outside China, absorb the import taxes or pass along the burden to their customers.

Officials from both countries have met four times for formal talks, most recently in August, when Treasury's undersecretary for global affairs, David Malpass, led discussions in Washington with Chinese vice minister Wang Shouwen. In addition to unease over the trade war, its has been further supported by a robust stimulus-induced performance from the US economy coming at a time where growth elsewhere in the world has begun to wane.

The summary, released on Tuesday morning, quoted Zhong as saying "entrepreneurs are very anxious about the possible consequences of trade conflicts in the world's two largest economies, which we do not want to see".

Economists warn the tariffs could chip away at U.S. economic growth.

Bundles of aluminum ingots sit stacked at a China National Materials Storage and Transportation Corp. stockyard in Wuxi, China.

The prospect of a more aggressive trade war with China pushed stocks lower, after investors had previously been largely untroubled by the Trump administration's trade policies.

The White House said in a statement that Trump had been clear that he and his administration would continue to take action to address China's trade practices and encouraged Beijing to address USA concerns.

"It will be a lot of money coming into the coffers of the United States of America", the president said at a Monday White House event, before officially announcing the additional tariffs.

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House Ways and Means Committee Chairman Kevin Brady said Trump is clearly increasing the pressure on China to come to the table and begin a new trading relationship that is fairer to the American farmers, workers and businesses.

"My administration will not remain idle while those interests are under attack".

President Trump defended his mercantilist policy on Monday, tweeting that "Tariffs have put the USA in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been nearly unnoticeable".

Trump's latest escalation of tariffs on China comes after several meetings yielded no progress.

It would be devastating to the New Zealand economy if it faced increased tariffs on some of its big exports to the U.S., he said.

"That's why we continue to urge everybody, whether they are those who engage in market distorting subsidies, or whether they are those who might talk about or pursue multi-lateral tariff actions, to think carefully about the consequences of doing so". Beijing's target list of United States goods to penalize was heavy on agriculture.

In the aftermath of the global financial crisis ten years ago, the leaders of the world's major powers pledged that never again would they go down the road of protectionism which had such disastrous consequences in the 1930s-deepening the Great Depression and contributing to the outbreak of world war in 1939.

If he does go ahead with a further $267bn worth of tariffs, it would mean virtually all of China's United States exports would be subject to new duties. We are not asking for special treatment, but rather for an equal playing field in a nondiscriminatory business environment. A USTR spokesman did not respond to queries about the tariffs.

Farmers, manufacturers, retailers and other industry groups have formed a coalition to oppose the tariffs, calling them taxes on American families.

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