Monday, 24 June, 2019

USA readies new tariffs as Trump says he'll meet China's Xi

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Ginger Lawrence | 14 May, 2019, 04:27

"Investors are increasingly anxious an anticipated second-half profit rebound may now evaporate as President (Donald) Trump's threat to tariff the remaining US$325 billion in Chinese imports would disproportionately target consumer products like iPhones, thereby posing a greater threat to the consumption-driven United States economy", said Alec Young, managing director of global markets research at FTSE Russell.

China plans tariff hikes on $60 billion of USA imports after the Trump administration on Friday raised tariffs on $200 billion in Chinese imports from 10% to 25%.

China announced it would hit the USA with tariffs of $60bn on $200bn worth of goods starting on June 1.

The abruptness of Trump's announcement on May 5, just days before the last round of talks, about raising tariffs to 25% made companies see doing business in China as more uncertain, said Jake Parker, vice president of the U.S.

The White House's top economic adviser, Larry Kudlow, predicted that the impact on U.S.jobs and growth from higher tariffs assessed on Chinese goods would be "de minimis", while conceding that "both sides will suffer" from the trade war. Many economists predicted the tariffs imposed on steel, aluminum, and Chinese imports a year ago would have much bigger economic effects than they have.

China's announcement Monday said tariff increases are going ahead based on a list of $60 billion of USA goods Beijing released in August.

"China should not retaliate-will only get worse", he said on Twitter.

Rather going through a multilateral organization like the World Trade Organization, which would have allowed China to save face against its biggest rival, Trump has chosen potentially humiliating bilateral talks.

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"It's clear that there is a lot of nervousness around the U.S". On Monday he said, "We're dealing with them".

And the trade dispute has hit USA soybean exports hard.

Both President Trump and Chinese President Trump Xi Jinping could potentially come face-to-face when both are in Japan next month for a meeting of the Group of 20 leaders.

The move, widely expected after the United States last week raised tariffs on $200 billion in Chinese imports, heightened fears the world's two largest economies were spiralling into a no-holds-barred dispute that could derail the global economy.

On Monday, China also said USA policies are threatening the existence of the World Trade Organization, setting out a string of grievances in a WTO "reform proposal" published by the organisation on its website. The Chinese list released Monday matched Trump's latest move in that it simply hikes the duties on a list of thousands of items that had already been targeted in an earlier phase of the trade war. That's 70 per cent of the USA economy. "China trade talks coupled with continued provocative tweets from President Trump provides no relief for risk sentiment as we look to another weak start to the week for Asia markets", Jingyi Pan of IG said in a commentary.

The EU imposed import duties of 25% on a $2.8 billion range of imports from the United States in retaliation for USA tariffs on European steel and aluminum.

Chinese foreign ministry spokesman Geng Shuang told a news briefing in Beijing that China would "never surrender to external pressure".