U.S. hikes tariffs on Chinese goods, China says to strike back

[webfact]

U.S. hikes tariffs on Chinese goods, China says to strike back

By David Lawder and Yawen Chen

 

FILE PHOTO - Containers and trucks are seen on a snowy day at an automated container terminal in Qingdao port, Shandong province, China December 10, 2018, REUTERS/Stringer/File Photo

 

WASHINGTON/BEIJING (Reuters) - U.S. President Donald Trump's tariff increase to 25% on $200 billion worth of Chinese goods took effect on Friday, and Beijing said it would strike back, ratcheting up tensions as the two sides pursue last-ditch talks to try salvaging a trade deal.

 

China's Commerce Ministry said it "deeply regrets" the U.S. decision, adding that it would take necessary countermeasures, without elaborating.

 

The hike comes in the midst of two days of talks between top U.S. and Chinese negotiators to try to rescue a faltering deal aimed at ending a 10-month trade war between the world's two largest economies.

 

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday.

 

The Commerce Ministry said that negotiations were continuing, and that it "hopes the United States can meet China halfway, make joint efforts, and resolve the issue through cooperation and consultation".

 

With no action from the Trump administration to reverse the increase as negotiations moved into a second day, U.S. Customs and Border Protection imposed the new 25% duty on affected U.S.-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.

 

Goods in the more than 5,700 affected product categories that left Chinese ports and airports before midnight will be subject to the original 10% duty rate, a CBP spokeswoman said.

 

The grace period was not applied to three previous rounds of tariffs imposed last year on Chinese goods, which had much longer notice periods of at least three weeks before the duties took effect.

 

"This creates an unofficial window, potentially lasting a couple of weeks, in which negotiations can continue and generates a 'soft' deadline to reach a deal," investment bank Goldman Sachs wrote in a note.

 

"Given this detail, downside to sentiment might be slightly more muted than if the tariff increase came with a 'hard' deadline. This also leaves an opportunity for the two sides to reach an agreement in the next couple of weeks, though challenges remain."

 

Trump gave U.S. importers less than five days notice about his decision to increase the rate on the $200 billion category of goods to 25%, which now matches the rate on a prior $50 billion category of Chinese machinery and technology goods.

 

U.S. stock futures fell and Asian shares pared gains after the U.S. tariff hike, with investors worried that a protracted trade war could hamper global economic growth.

 

E-mini futures for U.S. S&P500 slipped, last down 0.5% in volatile trade. MSCI's broadest index of Asia-Pacific shares outside Japan was more than 1% lower. Chinese share markets fell on their reopen after the lunch break, but quickly recovered ground.

 

Michael Taylor, managing director and chief credit officer for Asia-Pacific at Moody's Investors Service, said the U.S. move exacerbated uncertainty in global trade, added to U.S.-China tensions, and negatively affected global sentiment.

 

"The higher tariffs could also lead globally to the repricing of risk assets, tighter financing conditions and slower growth," Taylor said.

 

WIDER IMPACT

The biggest Chinese import sector affected by the rate hike is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of U.S.-made products.

 

Furniture, lighting products, auto parts, vacuum cleaners and building materials are also high on the list of products subject to the higher duties.

 

Gary Shapiro, chief executive of the Consumer Technology Association said the tariffs would be paid by American consumers and businesses, not China, as Trump has claimed.

 

"Our industry supports more than 18 million U.S. jobs – but raising tariffs will be disastrous," Shapiro said in a statement.

 

"The tariffs already in place have cost the American technology sector about $1 billion more a month since October. That can be life or death for small businesses and startups that can't absorb the added costs."

 

Economists and industry consultants have said it may take three or four months for American shoppers to feel the pinch from the tariff hike but retailers will have little choice but to raise prices on a wide range of goods to cover the rising cost of imports before too long, according to economists and industry consultants.

 

Even without the trade war, China-U.S. relations have continued to deteriorate, with an uptick in tensions between the two countries over the South China Sea, Taiwan, human rights and China's plan to re-create the old Silk Road, called the Belt and Road Initiative.

 

(Reporting by David Lawder in Washington and Yawen Chen in Beijing; Additional reporting by Michael Martina, Ryan Woo and Ben Blanchard in Beijing; Editing by Simon Cameron-Moore)

 

-- © Copyright Reuters 2019-05-10

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[unamazedloso]

Who cares. Still cheaper to buy a bike or car from china to the US than china to Thai. Just tried importing a bike and pulled the plug last minute. Taxes are ludicrous! and make no sens. Good on the US i say as its an unfair world.

[Lungstib]

30 minutes ago, webfact said:

U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday

From what I've seen of this man it was possible that in all that time he never made a coherent statement or made any sense. I hope he wasn't answering questions, that looks to be an impossible task from some of his Youtube appearances.

[Tug]

Get ready to pay more much much more for everything it just boggles my mind that we would let Donald anywhere near any negotiating with his now known epic failures at business probably going to be a blood bath in the stock market today

[bristolboy]

3 hours ago, unamazedloso said:

Who cares. Still cheaper to buy a bike or car from china to the US than china to Thai. Just tried importing a bike and pulled the plug last minute. Taxes are ludicrous! and make no sens. Good on the US i say as its an unfair world.

People who are just barely getting by might care. But it's definitely important to know that you, whoever you are, don't.

[Nyezhov]

 

5 hours ago, unamazedloso said:

Good on the US i say as its an unfair world.

Since this trade biz started, I have been noticing a change out there where businesses have been dumping their chinese suppliers. I was in Walamart the other day and where in the past it was "Made in China", now it is "Made in Mexico" or "Made in Thailand". I bough a Hard Drive in BKK a few months ago, and it was Made in China. The exact same drive here in the states was made in Thailand.

 

Execs at these big companies are not stupid, from the minute Trump first tweeted, they have been sourcing outside of China. That doesnt even count the companies who ditched China regardless becasue of the uncertainties and costs of doing business there. Ive done business myself in China, and it isnt easy.

 

Regardless of the apocrypha I just gave you, China is a house of cards. This hurts them more than it hurts us because our econmony can absorb the shock and seek alternatives in hundreds of companies and countries ready to do business. Personally, Ill take an extra 10 points on a pair of flip flops to put the Chinese in their place, with the fat tax refund Donnie gave me, a middle calss retired working dude, I can absorb that 10 points, and can most Americans.

 

Hey, it would surely be in our national interest to cut the flow of business cash to china and send it to say....El Salvador......

 

Edited May 10, 2019 by Nyezhov

[candide]

8 minutes ago, Nyezhov said:

 

Since this trade biz started, I have been noticing a change out there where businesses have been dumping their chinese suppliers. I was in Walamart the other day and where in the past it was "Made in China", now it is "Made in Mexico" or "Made in Thailand". I bough a Hard Drive in BKK a few months ago, and it was Made in China. The exact same drive here in the states was made in Thailand.

 

Execs at these big companies are not stupid, from the minute Trump first tweeted, they have been sourcing outside of China. That doesnt even count the companies who ditched China regardless becasue of the uncertainties and costs of doing business there. Ive done business myself in China, and it isnt easy.

 

Regardless of the apocrypha I just gave you, China is a house of cards. This hurts them more than it hurts us because our econmony can absorb the shock and seek alternatives in hundreds of companies and countries ready to do business. Personally, Ill take an extra 10 points on a pair of flip flops to put the Chinese in their place, with the fat tax refund Donnie gave me, a middle calss retired working dude, I can absorb that 10 points, and can most Americans.

 

Hey, it would surely be in our national interest to cut the flow of business cash to china and send it to say....El Salvador......

 

It's a nice anecdote, but it's not what statistics show. China has significantly increased exports to USA in 2018, both before and after sanctions started to be applied.

https://www.census.gov/foreign-trade/balance/c5700.html

[Nyezhov]

8 minutes ago, candide said:

China has significantly increased exports to USA in 2018, both before and after sanctions started to be applied.

That doesnt show what the exports are though dies it?

[candide]

16 minutes ago, Nyezhov said:

That doesnt show what the exports are though dies it?

True. It would be interesting to know wether imports from China broadly keep the same mix of products or not.

In any case, it shows that (up to now) increased tariffs have not contributed to reduce trade deficit, as it still increased in 2018.

[Sir Dude]

Simple ... if Americans support this trade war action then buy "Made in America" products instead of buying the cheap Charlie stuff from places like China and punishing the cynical western companies that have greedily gone to China and out-sourced jobs and all to such an undeserving place in the name of avarice. Didn't the "Made in Taiwan" label used to be ridiculed on the same level? All academic though, as China's and a few other country's labour markets around here are maturing and demanding higher wages all the time. When the tipping point comes, then the greedy corporations will just move to the next low level wage countries that can provide enough security to let them open factories and get cheap workers whilst the country is happy to develop .... cycle continues and will probably be Africa.

Edited May 10, 2019 by Sir Dude

[bristolboy]

53 minutes ago, Nyezhov said:

 

Since this trade biz started, I have been noticing a change out there where businesses have been dumping their chinese suppliers. I was in Walamart the other day and where in the past it was "Made in China", now it is "Made in Mexico" or "Made in Thailand". I bough a Hard Drive in BKK a few months ago, and it was Made in China. The exact same drive here in the states was made in Thailand.

 

Execs at these big companies are not stupid, from the minute Trump first tweeted, they have been sourcing outside of China. That doesnt even count the companies who ditched China regardless becasue of the uncertainties and costs of doing business there. Ive done business myself in China, and it isnt easy.

 

Regardless of the apocrypha I just gave you, China is a house of cards. This hurts them more than it hurts us because our econmony can absorb the shock and seek alternatives in hundreds of companies and countries ready to do business. Personally, Ill take an extra 10 points on a pair of flip flops to put the Chinese in their place, with the fat tax refund Donnie gave me, a middle calss retired working dude, I can absorb that 10 points, and can most Americans.

 

Hey, it would surely be in our national interest to cut the flow of business cash to china and send it to say....El Salvador......

 

It's lucky that finally in you has the sole person who doesn't filter his observations via a phenomenon knows as observer bias Otherwise, we would need to have mathematicians devise statistical algorithms to keep things objective and huge databases. And if we had any doubts about the validity of the alleged observations of an anonymous observer, it would be so easy to check up on them.

[Tug]

(The problem with the above post is it’s all to intertwined with Donald’s record I’m very uncomfortable with him negotiating anything that being said there is indeed a problem that needs fixing  just not by one of the biggest business man failures in history (nyezhovs post)

Edited May 10, 2019 by Tug

[heybruce]

The US sends money overseas to buy stuff, and the overseas countries use this money to buy US Treasuries and fund the Federal Deficit.

 

If we completely stopped all trade with China we would have to borrow money from other countries, and have to run a trade deficit with these other countries so they could fund our budget deficit.

 

If we want to end the trade deficit we have to end the budget deficit.  All this other stuff is just for show, and bad for the US and world economy.

 

Too bad we don't have a President smart enough to understand this.

[Traubert]

1 hour ago, Nyezhov said:

 

Since this trade biz started, I have been noticing a change out there where businesses have been dumping their chinese suppliers. I was in Walamart the other day and where in the past it was "Made in China", now it is "Made in Mexico" or "Made in Thailand". I bough a Hard Drive in BKK a few months ago, and it was Made in China. The exact same drive here in the states was made in Thailand.

 

 

 

Those companies are probably Chinese owned. The country of manufacture is incidental.

 

Walmart daren't dump China, they've got 700+ stores on the mainland.

Edited May 10, 2019 by Traubert

[Nyezhov]

20 minutes ago, Traubert said:

Those companies are probably Chinese owned. The country of manufacture is incidental.

Some are, some arent. 

 

Its got nothing to do with walmart "dumping" china, its all about the bottom line, and China even without tariffs was becoming less competitive.

[bristolboy]

Just now, Nyezhov said:

Some are, some arent. 

 

Its got nothing to do with walmart "dumping" china, its all about the bottom line, and China even without tariffs was becoming less competitive.

Nonsense. It is becoming less competitive in cheap goods. But that's because as its citizens' standard of living rises they're unwilling to work for the kind of wages it takes for those manufacturers to remain competiive. Instead those workers are now helping to create more valuable goods instead. That's a hallmark of economic progress. A country that remains competitive in producing good with low economic value is a country that's going nowhere economically.

[Traubert]

10 minutes ago, bristolboy said:

Nonsense. It is becoming less competitive in cheap goods. But that's because as its citizens' standard of living rises they're unwilling to work for the kind of wages it takes for those manufacturers to remain competiive. Instead those workers are now helping to create more valuable goods instead. That's a hallmark of economic progress. A country that remains competitive in producing good with low economic value is a country that's going nowhere economically.

Bingo!

 

So they open/buy/acquire factories in other countries where the labour is cheaper and make the bread and butter products there, labelled 'Made In XXXX.' The poorer ASEAN countries are lapping it up. Free trade zone, see?

 

Plus China has significantly moved back from concentrating on exports and concentrated on developing it's newly enriched domestic market. It stands at 56% of GDP now, up 10% in six years.

Edited May 10, 2019 by Traubert

[spidermike007]

This will historically be referred to as one of the largest tax hikes in history, on the American people. What Trump gave to the corporations as a huge tax break, he has now taken back. One of the problems with this administration, is that Trump has a bottom of the barrel approach, when it comes to hiring talent. He cannot attract the best, as he is the last person in the world, they would want to work for, or represent. So, he gets who he can, and they are typically the Ross, Mnuchin, Carson, Sanders, Conway, Barr, Gerrish, Miller types, of seriously low quality, bottom of the line individuals. 

 

So, to put these negotiators in the room with the Chinese, it is no wonder they could not come up with any solutions. Putting these people in the room with the Chinese, would be like asking Brittany Spears to negotiate a deal with Warren Buffett. The US is in a serious state of decline, and it shows on every level, these days. As for Trump himself, if his life depended upon it, he could not negotiate his way out of a paper bag. They art of not being able to make a deal to save his life. 

[Srikcir]

19 minutes ago, spidermike007 said:

So, to put these negotiators in the room with the Chinese, it is no wonder they could not come up with any solutions.

That's because US trade negotiations have gone beyond just trade issues such as trade balance.

It's more to do with foreign policy issues wherein the Trump administration wants a change in China's governmental control over Chinese production that is controlled by the State (communism) to production controlled by democratic capitalism (uncontrolled free market).

While Xi has shown a willingness and apparently close to agreement to negotiate details of exports and imports, he cannot agree to wholesale destruction of the very system of government that empowers his political status. It is a wonder then that Chinese negotiators can't fully agree to the trade deal that Trump wants?

 

With regard to protection of intellectual property and trade secrets, the solution already exists and can be implemented apart from trade negotiations!

It's called an investment treaty:

• it gives owners of intellectual property another way to protect their ideas. That's because the 2012 US "model" treaty — the template Washington uses for such agreements — covers ideas as an investment; expressly prohibits forced technology transfer; and, in terms of enforcement, gives investors the ability to seek compensation for Chinese misconduct through investor-state dispute settlement, including in a neutral venue like the World Bank.
• The United States has more than 40 investment treaties already in place with partners across the globe. Since at least 2008, Washington has been mulling over investment treaties with China and India.

Trump knows about this solution as he largely did away with investor rights in the US-Mexico-Canada trade agreement.

https://edition.cnn.com/2019/05/10/perspectives/china-us-trade-war-tariffs/index.html

So why not use a investment treaty with China to provide parity with IP?

I suspect because again it doesn't lead to change in how the Chinese government is structured.

 

 

 

 

[batata]

15 hours ago, candide said:

True. It would be interesting to know wether imports from China broadly keep the same mix of products or not.

In any case, it shows that (up to now) increased tariffs have not contributed to reduce trade deficit, as it still increased in 2018.

I am kind of a slow brainer and can't understand why Trump keeps saying China will pay for the trade deficit, in my mind US consumers are paying for it, not China. Example (please correct me if I am wrong) US company buys a product from China that costs 10 dollars payable in China, arrives in the US there is a 10% import tax the product's final cost is 11 dollars assuming company has a mark up of 50%  ($5.5) price to consumer would be 16.50 dollars. Now the same product with same cost in China at 10 dollars has a 25% import tax in the US thus final price $12.50 company mark up will be the same 50% ($6.25) the final price to consumers would be 18,75 dollars, consumers loosing buying power by 2.25 dollars. The importing company will make more profit, the seller in China still make the same money but the US consumers are the ones at the loosing end,  paying $2.25 more for the same thing... I don't get it, where is China paying for the tax? same will happen in the inverse if China taxes US goods, Chinese consumers will be the ones paying for that, there is a tax aid/break in China for companies that export goods, such tax can go from 7% to 13% depending on the company and type of goods they export, that will help some Chinese companies coop with the tax increase but in the US (if my recollection is correct) only some farmers are getting tax brakes, not manufacturing companies, I could be wrong...... China is only loosing on the quantity of exports to the US, by exporting less their economy in the long run will suffer unless they find alternative markets, which they will, much of their current production it's going to Africa they are still making (lots) money

[usviphotography]

Because manufacturers frequently can't just pass along entire costs to a customer. Especially if there are other low labor cost countries such as Vietnam making the same sort of products but not encumbered by tariffs. On some products, the tariff will be payed fully by the consumer, others will be a mix between consumer and producer, and others will fall almost entirely on the producer. 

[bristolboy]

2 minutes ago, usviphotography said:

Because manufacturers frequently can't just pass along entire costs to a customer. Especially if there are other low labor cost countries such as Vietnam making the same sort of products but not encumbered by tariffs. On some products, the tariff will be payed fully by the consumer, others will be a mix between consumer and producer, and others will fall almost entirely on the producer. 

Unless it's always the case the manufactures can't pass on the costs of tariff, then what Trump claims is a lie. Plain and simple.

[zydeco]

22 hours ago, webfact said:

Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday and were expected to resume talks on Friday.

Yes, these are the greatest talks eveh. They are talking about talking like nobody else has ever talked. These wonderful talks will help us bigly. Just talking about it can make you dizzy. 

[spidermike007]

2 hours ago, Srikcir said:

That's because US trade negotiations have gone beyond just trade issues such as trade balance.

It's more to do with foreign policy issues wherein the Trump administration wants a change in China's governmental control over Chinese production that is controlled by the State (communism) to production controlled by democratic capitalism (uncontrolled free market).

While Xi has shown a willingness and apparently close to agreement to negotiate details of exports and imports, he cannot agree to wholesale destruction of the very system of government that empowers his political status. It is a wonder then that Chinese negotiators can't fully agree to the trade deal that Trump wants?

 

With regard to protection of intellectual property and trade secrets, the solution already exists and can be implemented apart from trade negotiations!

It's called an investment treaty:

• it gives owners of intellectual property another way to protect their ideas. That's because the 2012 US "model" treaty — the template Washington uses for such agreements — covers ideas as an investment; expressly prohibits forced technology transfer; and, in terms of enforcement, gives investors the ability to seek compensation for Chinese misconduct through investor-state dispute settlement, including in a neutral venue like the World Bank.
• The United States has more than 40 investment treaties already in place with partners across the globe. Since at least 2008, Washington has been mulling over investment treaties with China and India.

Trump knows about this solution as he largely did away with investor rights in the US-Mexico-Canada trade agreement.

https://edition.cnn.com/2019/05/10/perspectives/china-us-trade-war-tariffs/index.html

So why not use a investment treaty with China to provide parity with IP?

I suspect because again it doesn't lead to change in how the Chinese government is structured.

 

 

 

 

Great points. We encouraged the formation of democracy in Egypt, Libya and Algeria. How is that working out? We did the same in Iraq and Afghanistan. Do they even want our democracy? Are they ready for it, within the region? Is it worth the $7billion or so we have spent, the thousands of American and allied lives, and the hundreds of thousands of civilian lives that have been lost in the battle? Long term prospects for the region? What are they? 

 

Even Israel, which calls itself a democracy, is at best an apartheid state, that suppresses it's non Jewish population with an iron fist. We encouraged democracy in Cambodia and Burma. How is that working out? Autocratic, multi billionaire serial killing strongmen in both nations, though Burma still poses as a democracy, and most liberals buy into it.

 

The US has horrific foreign policy. It has for decades now. And with bullies and dimwits like Bolton and Pompeo in charge of foreign policy, and Trump at the helm, the US is completely lost. 

[zydeco]

8 minutes ago, spidermike007 said:

Great points. We encouraged the formation of democracy in Egypt, Libya and Algeria. How is that working out? We did the same in Iraq and Afghanistan. Do they even want our democracy? Are they ready for it, within the region? Is it worth the $7billion or so we have spent, the thousands of American and allied lives, and the hundreds of thousands of civilian lives that have been lost in the battle? Long term prospects for the region? What are they? 

 

Even Israel, which calls itself a democracy, is at best an apartheid state, that suppresses it's non Jewish population with an iron fist. We encouraged democracy in Cambodia and Burma. How is that working out? Autocratic, multi billionaire serial killing strongmen in both nations, though Burma still poses as a democracy, and most liberals buy into it.

 

The US has horrific foreign policy. It has for decades now. And with bullies and dimwits like Bolton and Pompeo in charge of foreign policy, and Trump at the helm, the US is completely lost. 

Sounds like you need to sit down and talk with Jimmy Carter, as he is the one responsible for this shift in FP.

[Kiwiken]

The poorest members of society always pay. If you put tariffs up. Prices rise and this hurts the lowest paid for they buy whatever is cheapest. i f you move manufacturing back to the USA then prices rise and again it is the lowest Socio economic group that suffers. .

As China's wealth grows and wages increase so manufacturing will seek cheaper labour markets.

Vietnam . Thailand , phillipines , Bangladesh etc until they too grow in wealth and their domestic wage rises and the manufacturing moves,

In 50 years Africa may become the hub.

For now it is Asia.

The West held sway for 200 years and for now must accept where we are.

Tarrifs will hurt everyone.

And if a full blown trade war ensues the USA may find itself back in the situation of the 1930's.

Trump is a short sight Insular looking Idiot.

[Tropposurfer]

The world order changes in front of our eyes. The days of Caucasians ruling the earth are over.

[spidermike007]

9 minutes ago, Tropposurfer said:

The world order changes in front of our eyes. The days of Caucasians ruling the earth are over.

And I believe that is probably a good thing. This whole white supremacy thing is such a myth. Perhaps a great campaign idea, to drum up support amongst the nostalgic, who think everything was great, when America and Europe was more white. The reality is, and I say this as a white man, people of color generally bring more to the table. White people commit alot of crime. When I am back in the US, it seems alot of white people are boring, listless, empty suit types, who do not have much to say. 

[Jonnapat]

The way this is going it won't be long before the next financial crisis 

[Mavideol]

22 hours ago, Nyezhov said:

 

Since this trade biz started, I have been noticing a change out there where businesses have been dumping their chinese suppliers. I was in Walamart the other day and where in the past it was "Made in China", now it is "Made in Mexico" or "Made in Thailand". I bough a Hard Drive in BKK a few months ago, and it was Made in China. The exact same drive here in the states was made in Thailand.

 

Execs at these big companies are not stupid, from the minute Trump first tweeted, they have been sourcing outside of China. That doesnt even count the companies who ditched China regardless becasue of the uncertainties and costs of doing business there. Ive done business myself in China, and it isnt easy.

 

Regardless of the apocrypha I just gave you, China is a house of cards. This hurts them more than it hurts us because our econmony can absorb the shock and seek alternatives in hundreds of companies and countries ready to do business. Personally, Ill take an extra 10 points on a pair of flip flops to put the Chinese in their place, with the fat tax refund Donnie gave me, a middle calss retired working dude, I can absorb that 10 points, and can most Americans.

 

Hey, it would surely be in our national interest to cut the flow of business cash to china and send it to say....El Salvador......

 

China and Thailand are part of ASEAN trade pact... could it be the parts are all from China but some "stopped" in Thailand to change the stickers to indicate made in Thailand, it happens quite often