Tuesday, 13 November, 2018

US stocks close higher even as US-China dispute escalates

Imported nuts from the United States are displayed for sale at a supermarket in Beijing on Monday. China raised import duties on U.S. pork fruit and other products Monday in an escalating tariff dispute with President Trump that companies worry might dep US identifies $50 bn in Chinese imports facing tariffs
Gustavo Carr | 05 April, 2018, 01:59

Chinese premier Li Keqiang said last month that China would improve conditions for foreign companies, bringing down overall tariffs for imports, and open up manufacturing to foreign investors with no requirement for technology transfer.

US stocks were close to break-even by late morning, a recovery from an initial drop sparked by fears of a trade war with China.

Stocks have rallied back from an early jolt Wednesday, as investors weighed whether back-and-forth tariff threats between the US and China could escalate into full-fledged trade hostilities or if the two sides could eventually settle their differences.

The USTR list, which includes medicines and technology devices related to the aerospace and robotics industries, is now out for a 30-day public scrutiny before the tariffs take effect.

Stocks rallied to finish higher Wednesday, overcoming worries about an escalating trade dispute between the US and China.

Zhu warned against expecting Beijing to back down.

Economists and investors worry other governments might respond by raising their own import barriers.

No longer fearing an imminent trade war, investors are instead focusing on a promising earnings season, McMillan said. "But if we boycott all USA products, China-made products can easily fill the gap".

"But the best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the United States side", he told a regular briefing on Wednesday.

The larger concern, Ross said, is the protection of USA intellectual property.

Trump's decision has already triggered blowback from Beijing, which has retaliated by threatening tariffs across numerous US import categories.

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Among tech products not exempted were magnetic hard drives and flat-panel television sets, and the USA duties were heavily focused on industrial manufactured goods, such as machines, robots, motors, valves, medical devices, and pharmaceuticals.

China's move could hit U.S. President Donald Trump's Republican Party base, particularly among farmers in Iowa, Ohio and MI - top soybean-producing States.

The dispute "may compel countries to pick sides", said Weiliang Chang of Mizuho Bank in a report.

Speaking on CNBC on Wednesday morning, Ross said that tariffs imposed by China amount to 0.3 per cent of US GDP and that some action on tariffs has been "coming for a while".

The U.S. government, as well as governments around the world, has sought to shield industries from Chinese takeovers. It's down nearly 5 percent since March 1 as investors have focused on tariffs as well as controversies surrounding technology companies including Facebook. -China Business Council, an industry group.

Chinese hackers are also suspected in a backdoor attack revealed last September on popular file cleaning software CCleaner, apparently orchestrated to gain access to major tech companies like Google and Microsoft. "They did target Made in China 2025, but with a caveat".

Pain was also felt in the United States automobile industry, which is expected to hurt thanks to the Chinese tariffs.

"If we stop importing a product from China, we'll just import it from the next lowest cost producer, such as Korea or Vietnam or Malaysia, rather than make it in the USA and pay more for it". The Chinese automaker last month met with U.S. auto dealers in Las Vegas as it plots out bringing the GS8, a seven-passenger sport utility vehicle with voice-activated windshield wipers, to American shores.

China's state-run media says the probe will "poison" the relationship between the two countries, while the Chinese government later slams the Trump administration's "unilateralism and protectionism".

The U.S. tariffs target the high-end technology products made in China.

Cui said the meeting covered all aspects of the U.S. "In the event of all-out trade war, both may lose all sense of reason, but I do hope it will never happen". Regulators could withhold licenses or alter other conditions to hamper foreign business activity.