China Trade War: Chinese Tariffs Aim at the Heart of Trump Country

Apr 05, 2018, 00:59
China Trade War: Chinese Tariffs Aim at the Heart of Trump Country

The American Chemistry Council (ACC) - which counts Exxon XOM.N , Chevron CVX.N , Monsanto MON.N and others as its members - urged the United States and China to come to an understanding.

China has wasted no time in firing back after President Donald Trump's salvo against its high-tech products.

The announcement triggered further heavy selling in global stock markets and commodities, with USA stock futures sliding 1.5 per cent, soybean futures plunging 3.7 per cent and the dollar briefly extending early losses.

Mr Trump tweeted staying month: "When a rustic (UNITED STATE) is losing several billions of dollars on sector with nearly every single country it does patronize, sector battles are superb, and also straightforward to win". That's on top of duties announced last month, meaning that some forms of those products will face a 50 percent fee to reach the US, further boosting prices for some products. "Including footwear on the list was a very real and substantial threat to footwear workers and consumers across the country, and we are very pleased that we can take a deep sigh of relief".

"You're going to have a lot of sectors of the U.S. economy in places that have been fairly supportive of the president where they will all the sudden start to feel some pain - and that's deliberate", says Phil Levy, senior fellow at the Chicago Council on Global Affairs.

A key unknown factor is whether the tariff talk is all bluster and negotiating tactic - or actual trade policy that the United States plans to implement come hell or high water.

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Also, American companies have long accused China of stealing technology and intellectual property.

Cotton represents another significant flow of trade from the USA: exports of fiber in its raw form fetched $5.8 billion a year ago, government data show.

Benchmark 10-year notes last were little changed in price to yield 2.7826 percent.

Q: What are the benefits of raising tariffs?

Jim Schumacher, co-owner of Schumacher Ginseng in Marathon, Wisconsin, said the 15 per cent tax will hurt: "You've got to be price-competitive, even if you have the top-quality product".

Q: Is there a downside to raising tariffs?

In January, he slapped tariffs on imported solar panels and washing machines.

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The department, led by Commerce Secretary Wilbur Ross, proposed a range of tariffs in February 2018 including 24% on steel and 7.7% on aluminum. That will show up in everything from buildings to cars.

Economists say the back-and-forth does not amount to a full-blown trade war yet, but the risks are rising. Others noted the two countries have too much to lose from a trade war.

China and the United States have announced tariffs on more than $100 billion of combined goods.

The products targeted by the Chinese tariffs were worth $50bn (£35.5bn) in 2017, according to the Chinese commerce ministry.

"The financial trigger is once again trade war worries", said Alec Young, managing director of global markets at FTSE Russell.

Indeed - Kudlow, a former Chief Economist of Bear Stearns, who became a commentator on "CNBC", is well known for being a strong advocate of free trade and was the first to criticize the tariffs on steel and aluminum stating that they would only harm the USA economy.

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