Trump Threatens China With $100B In New Tariffs

Laverne Mann
April 7, 2018

Party mouthpiece People's Daily also alluded to the shifting Sino-US economic relationship, and that Mr Trump's latest threat showed the US' "sinister intention of using a trade war to contain China's development".

"International Trade 101 analyses the partial equilibrium effects of a tariff as driving a wedge between demand and supply curves, whereby the price goes up and the quantity down", he said in a note to clients.

Of course, most Americans don't pay close attention to the details of trade agreements and so Trump could present the results of direct negotiations with China or of cases sent to the World Trade Organization as victories and signs of his negotiating prowess and toughness.

He said he had also instructed agricultural officials to implement a plan to protect U.S. farmers and agricultural interests.The threats sound strident but the actual impact is far from clear or straightforward - and will vary dramatically from product to product.

"If there really was a major trade war between the USA and China, that would have an aggregate effect on global economic growth", he said.

On Tuesday, the White House went ahead with tariffs that target manufacturing technology, arguing that Chinese trade practices have unfairly hurt USA business.

China responded to the announcement by matching it with proposed equivalent tariffs on us goods should the White House move forward with the plan.

The Dow Jones industrial average fell as much as 501 points after Beijing officials struck back against Trump's initial plans to impose tariffs on Wednesday.

During the presidential campaign, Donald Trump often spoke about "unfair trade practices" of China and vowed to correct the trade imbalance.

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White House officials have suggested throughout the week that talks with the Chinese could help resolve trade issues between the two countries. "It's an area where China is trying to further develop and that's what they took aim at first".

China, in return, said it didn't want a trade war, but was ready to fight Trump's policies "at any cost".

If implemented, the further tariffs would triple the $50 billion placed on goods imported from China that Trump announced on Tuesday. He gave no indication what measures Beijing might take.

"U.S. oil inventories remain a volatile gauge, but they still provide a good litmus test for the short-term", said Stephen Innes, head of trading for the Asia-Pacific region at futures brokerage OANDA in Singapore. Trump asserted the WTO gives the Asian superpower "tremendous perks and advantages, especially over the U.S".

Meanwhile, Trump shows no sign of backing down from the escalation and continues to defy warnings from US trade groups. But economists warn that the tit-for-tat moves bear the hallmarks of a classic trade rift that could escalate. Worry is intensifying among Republicans, who traditionally have favored liberalized trade.

In March, Trump imposed tariffs on imported steel and aluminum but exempted most major countries except China and Japan. China countered by announcing tariffs on $3 billion worth of US products. After a bullish regular trading day, USA equity futures sold off sharply in after-market-hours trading. Mnuchin says in the interview that USA officials are in communication with the Chinese. The Chinese list on Wednesday included soybeans, the biggest USA export to China, and aircraft up to 45 tons in weight.

Kudlow on Thursday said the administration was involved in "delicate negotiations" that might forestall the need for tariffs. "A solution in the next three months would be better than anything".

Not a day later, China fired back with its own threat of $50 billion in tariffs, including levies on soybeans, some aircraft and automobiles, prompting Trump's next threat. Even though investors are optimistic about the state of the global economy and company profits continue to grow, Nixon said the administration is creating the thing investors hate the most: uncertainty.

"With respect to the Trump administration, its political success will rise and fall with the economy", Kudlow said.

Other reports by MaliBehiribAe

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