Tuesday, 17 July, 2018

Trump unleashes trade war with tariffs on China

Europe rejects China’s offer of alliance in trade war with United States German Chancellor Angela Merkel gestures next to Chinese President Xi Jinping in Berlin
Laurie Berry | 08 July, 2018, 15:21

The United States hiked tariffs on Chinese imports Friday and Beijing announced it was retaliating against American goods in a technology dispute between the world's two biggest economies that President Donald Trump says he is prepared to escalate.

With additional tariffs on Chinese products worth US$34 billion made effective on Friday, the United States has taken a unsafe step that will take a toll on its own economy. One, if Chinese steel cannot find its way into the USA, it could be dumped on other markets, triggering protective tariffs. Given that the U.S. buys almost four times as much from China as it sells to them, China may have to seek avenues other than trade to retaliate if the battle escalates.

"If U.S. -China trade tensions intensify, it would have an adverse effect on not only China but surrounding countries" that have close economic relations with Asia's biggest economy, said Toru Nishihama, chief economist at the Dai-ichi Life Research Institute.

President Donald Trump said more than $500 billion in Chinese products could ultimately be penalized.

He described the United States actions "a violation of world trade rules" and accused Donald Trump of "initiating the largest-scale trade war in economic history".

The president's tariffs, the PIIE's researchers conclude, are "a prime example of 20th century tools aimed at the knowledge-embodying trade flows of the 21st century". Back in March, Trump threatened to slap tariffs on all steel and aluminum imports into the US, to which China - along with other key trade partners - threatened to retaliate. He and his administration should realize that there will be no winners in this trade war.

In addition to the $US16b under consultation, Mr Trump has flagged there could be more tariffs in store. If the price of US soybeans goes up in China, which imports about a third of USA soybeans, then they're less attractive to Chinese buyers, he said.

China is targeting agriculture products and mechanical parts for the energy sector, whereas the United States is aiming its tariffs at a large number of industrial products and resources.

But if the trade war continues into the spring of 2019, the owners of thousands of smaller farms, many handed down from generation to generation, could face tough decisions, pitting their pocketbooks against the president's policies.

Trapped boys in Thai cave write touching letters to parents
The Thai Navy SEALs , who are leading the unsafe operation to get the boys out, posted images of the letters on Facebook. The children urged relatives "not to worry" and asked for their favorite foods once they are safely evacuated.

"Trade war is never a solution", said Chinese Premier Li Keqiang.

On Thursday, Trump said higher tariffs on an additional $16 billion in Chinese goods were set to take effect in two weeks. The US and China slapped levies + on $34 billion of each other's exports, the first tangible shots in a trade battle that both sides are bracing to fight for months.

Beijing has vowed to respond immediately with an equal amount of tariffs of its own against USA autos, agricultural and other products.

The U.S. already has imposed tariffs of 25 percent on imported steel and 10 percent on aluminum from the European Union, Canada and Mexico, triggering immediate retaliation from U.S. allies and protests from American businesses and farmers.

China has accused the United States of "opening fire" on the world with tariffs that took effect Friday, warning that it would respond the moment that duties on $34 billion in its products kick in.

The American tariffs are the result of Mr Trump's attempt to protect USA jobs and stop what he calls "unfair transfers of American technology and intellectual property to China". Mary Lovely, economics professor at Syracuse University, says that roughly 60 percent of U.S. However, if and when the war escalates, tariffs would go up on the daily necessities Americans have got used to buying cheap.

Beijing's commerce ministry, in a statement shortly after the U.S. deadline passed on Friday, said the world's No. 2 economy was forced to retaliate by placing jacked-up 25 percent tariffs on USA cars, soybeans and lobsters.

Despite three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump chose to go ahead with the tariffs.

"It's still hard for me to believe the Trump administration could develop and negotiate an overarching package with China that genuinely sticks", Kennedy said.

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