Dueling tariffs raise fears of long U.S.-China trade battle

[rooster59]

Dueling tariffs raise fears of long U.S.-China trade battle

By Michael Martina and David Lawder

 

FILE PHOTO: Shipping containers are seen at the port in Shanghai, China April 10, 2018. REUTERS/Aly Song/File Photo

 

BEIJING/WASHINGTON (Reuters) - A U.S.-China trade fight resulting in duties on $34 billion worth of each other's imports was seen dragging on for a potentially prolonged period, as Washington and Beijing flexed their muscles with no sign of negotiations to ease tensions.

 

Friday marked the start of the U.S. duties that were promptly met with retribution by China, as Beijing accused the United States of triggering the "largest-scale trade war."

 

The escalating fight between the world's two biggest economies meant that it could "take economic and political pain to get these two parties to the (negotiating) table," said Scott Kennedy, head of China studies at the Center for Strategic and International Studies in Washington.

 

President Donald Trump already is threatening additional rounds of tariffs, possibly targeting over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year.

 

It will take weeks to months for the U.S. Trade Representative to review and possibly activate any new rounds of punishment.

 

"The key questions during that time are what will happen to financial markets, how will U.S. voters react and will China's economy start to wobble," Kennedy said in a telephone interview.

 

Erin Ennis, senior vice president of the U.S. China Business Council, said there was a danger the two sides will dig in on trade sanctions, without a clear strategy for resuming negotiations.

 

While U.S. companies doing business in China agree with Trump's complaint about Chinese intellectual property practices, Ennis said they do not see tariffs pushing China into submission.

 

China's commerce ministry said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans, and lobsters also faced 25 percent tariffs.

 

Some of Trump's fellow Republicans in the U.S. Congress lashed out at his actions.

 

"Tariffs not only hurt our farmers, ranchers and airplane manufacturers, but they also harm every American consumer. We should be working with our allies to isolate China rather than escalate a trade war," said Senator Jerry Moran, who represents the agriculture-heavy state of Kansas.

 

China's soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.

 

Friday's long-expected China tariff volley fueled fear that a prolonged and escalating battle would hurt global trade, investment and growth, while also damaging U.S. farm exports and potentially driving up food prices in China.

 

For example, U.S.-based audio company Sonos Inc, in an initial public offering on Friday, noted its performance "may be materially harmed" by trade restrictions.

 

"Trade war is never a solution," Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and eastern European countries.

 

"China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests."

 

In the run-up to Friday, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.

 

The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks.

 

China lodged a case with the World Trade Organisation (WTO) against the United States, its commerce ministry said on Friday.

 

White House Council of Economic Advisers Chairman Kevin Hassett, in an interview on Fox Business Network on Friday, said Trump is "going to deliver better (trade) deals." He added that for now, "He's called the bluff of other countries that have basically been abusing" U.S. companies and workers.

 

To view a graphic on U.S. trade with China, click: https://tmsnrt.rs/2KAT34a

 

PRICE WATCH

 

Importers of American retail goods hit by higher Chinese duties were reluctant to pass the costs on to consumers for now.

 

An analysis of over four dozen targeted U.S products showed that prices were little changed on Friday afternoon from earlier in the week. The products, sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

 

Ford Motor Co said on Thursday that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China. But German automaker BMW said it is unable to "completely absorb" new Chinese tariff on imported U.S.-made models and will raise prices.

 

U.S. stocks shook off the tariffs, which investors said had been well-anticipated and priced-in. The S&P 500 rose to a two-week high on Friday, partly buoyed by strong U.S. jobs growth. However, investors said that a significant escalation in tension would cause worries to set in.

 

Companies seeking product exclusions from tariffs on Chinese goods imported into the United States will get 90 days to file such requests, the U.S. Trade Representative's office said on Friday.

 

To view a graphic on China trade with US, click:

 

'GANG OF HOODLUMS'

 

Chinese state media slammed Trump's trade policies and on Friday likened his administration to a "gang of hoodlums."

 

China's commerce ministry called the U.S. actions "a violation of world trade rules" and said that it had "initiated the largest-scale trade war in economic history."

 

Trump has railed against Beijing for intellectual property theft, barriers to entry for U.S. businesses and a $375 billion U.S. trade deficit with China.

 

A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods - $34 billion plus a planned follow-on list worth $16 billion - will cut China's economic growth by 0.2 percentage points, the official Xinhua news agency reported Friday.

 

China's tariff list is heavy on agricultural goods such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

 

To view a graphic on Industry impact, click:

 

To view a graphic on the Tit-for-tat impact, click: https://tmsnrt.rs/2GXE9qr

 

 

-- © Copyright Reuters 2018-07-07

 

[nobodysfriend]

Chinese like " win win " situations , where everybody is a winner .

Trump's trade war politics will clearly lead to a " lose lose " situation , where everybody is a loser .

[car720]

What does the US buy from China that is not pre ordered by American manufacturers?

Has it not long been a case of other countries using cheap Chinese labour to manufacture?

[Johnnyngai]

Just when average mainland Chinese have unlimited access to dog food,  a trade war with the mighty Uncle Sam. 

It is belt tightening time again. 

The first time I visited Southern China 20 years ago, an average adult male worn size 28 pants.   

[Ulic]

3 hours ago, nobodysfriend said:

Chinese like " win win " situations , where everybody is a winner .

Trump's trade war politics will clearly lead to a " lose lose " situation , where everybody is a loser .

Absolutely ridiculous, the only thing China likes is China wins, China wins. The US has waited decades for China to live up to its commitments to open up its markets to American/foreign companies and follow copyright rules. They have done everything possible to stymie American/foreign companies, forcing them to take on Chinese partners and transfer technology to China as well as flout copyright law, reverse engineer and copping at will. I had a friend who was in charge of the Bell Mobility (Canada) research department. Part of his job was to take apart equipment and assess its strengths/weaknesses, and compatibility with the Bell Mobility telecommunication network. He told me much of Chinese products was exact copies of American products. Including the pirated companies stamp. I am no Trump fan but it seems that the time has come for China and the buck stops with Trump. Live up to the decades old commitment that allows foreign companies access to the Chinese market, stop the copyright infringement and we can resume "fare" trade. The tariffs are how you get China's attention and force them to the table and get them to live up to their decades' old commitments. Make no mistake I believe the US is a trade bully, as is Europe. Both subsidize agriculture to the tune of 24 billion a year and then cry foul about Canada's dairy supply management system. I am also left scratching my head about the tariff rate disparity between European-American auto/truck imports/exports. We shall see what comes to pass.  

[Peasandmash]

This is <deleted> horrible. no more cheap shit from china? Democrats can still go to walmart but what about the poor Republicans??...oh wait, there are no poor Republicans. democrats r such losers...

[bristolboy]

27 minutes ago, Peasandmash said:

This is <deleted> horrible. no more cheap shit from china? Democrats can still go to walmart but what about the poor Republicans??...oh wait, there are no poor Republicans. democrats r such losers...

Here is a list of states ranked by per capita wealth:

https://en.wikipedia.org/wiki/List_of_U.S._states_by_income

Out of the poorest 15, 14 voted for Trump. His support is particularly strong in the opioid belt. Now I'm being unfair. I've left out the amphetamine belt. His support is equally strong there, too.

 

[Credo]

8 hours ago, bristolboy said:

Here is a list of states ranked by per capita wealth:

https://en.wikipedia.org/wiki/List_of_U.S._states_by_income

Out of the poorest 15, 14 voted for Trump. His support is particularly strong in the opioid belt. Now I'm being unfair. I've left out the amphetamine belt. His support is equally strong there, too.

 

I've considered using opiods and amphetamines since he became president, but that said, it remains to be seen how much hurt the tariffs will cause.   If it hits Walmart, then his supporters will suffer a lot.   

[Bluespunk]

The great negotiator strikes again. 

[Redline]

11 hours ago, bristolboy said:

Here is a list of states ranked by per capita wealth:

https://en.wikipedia.org/wiki/List_of_U.S._states_by_income

Out of the poorest 15, 14 voted for Trump. His support is particularly strong in the opioid belt. Now I'm being unfair. I've left out the amphetamine belt. His support is equally strong there, too.

 

On point 

[thaibeachlovers]

Bring it on. Either China is brought down economically, or it's going to take over the world, and not in a good way. 

If people have to pay more to have stuff they don't need made by cheap Chinese labour- tough. Everything in my home country is cheap Chinese junk, because all the decent manufacturers have been driven out of business by Chinese junk.

 

[Cadbury]

Thailand needs to remember the great in-balance of trade between between Thailand and the US to Thailand's advantage.

About 1/3 to the advantage of Thailand.

If POTUS gets to think Thailand is not playing the game he will hit them over the head with a hammer and remind one certain upstart who is the boss.

e.g. California wine exports to Thailand......customs, duty, excise = greed!

Edited July 8, 2018 by Cadbury