Friday, 22 February, 2019

US hits China with $34B round of tariffs; Beijing strikes back

U.S. cargo ship carrying soybeans in race to beat China's retaliatory tariffs US hits China with $34B round of tariffs; Beijing strikes back
Nellie Chapman | 08 July, 2018, 15:23

Jerry Moran, of Kansas, a state heavily dependent on agriculture.

States won by President Donald Trump in the 2016 election stand to lose the most as a trade war between the USA and China kicks off, according to Citigroup research.

United States tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, the two biggest economies were set on a risky path toward a full-blown trade war.

Another $16 billion worth of tariffs on Chinese imports are set to hit in the next two weeks. A second round will cover 284 more products at a later date. Taxes that the consumer will have to pay. If demand drops, jobs will be in jeopardy.

Asia is bracing for the opening salvo in a tit-for-tat trade battle, with the U.S. imposing 25 percent tariffs on $US34b ($NZ50b) of Chinese goods today. What galls them most is the president's justification: Using a little-used weapon in USA trade law, he has declared that the imported metals are a threat to America's national security.

China's tariff list is heavy on agricultural goods such as soybeans, sorghum and cotton, threatening USA farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa. "Manufacturers in the United States succeed when the rules are clear and fair and markets are open". "The math is simple. You tax soybean exports at 25-percent, and you have serious damage to US farmers".

"This doesn't only hurt OH farmers, it will hurt the entire OH economy", said Allen Armstrong, OSA president and a Clark County soybean farmer.

There are 18 states that grow about 96% of the US's soybeans, according to government statistics. They would always go to the cheapest place. -China tit-for-tat tariff fight is likely to shrink trade volume worldwide, which would weigh on the global economy that has been on a recovery track.

One seller pointed out that exporters of US-made goods might be impacted through retaliatory tariffs.

The two sides appeared to be making progress on resolving the tariff issue, until the Trump administration announced in May that it had resumed its plans to levy the 25% duty.

More than half of exported USA soybeans are sent to China, mostly to produce cooking oil and livestock feed.

How did we get here?

"All that is gone now".

"The U.S. clients have already told us they would adjust the prices", said an executive of an equipment manufacturing firm with exports to the Guangdong.

A survey on CEOs of 200 large USA enterprises showed that 90 percent of the executives were anxious about higher costs brought by trade frictions, and 95 percent of them regarded a potential slump in exports resulting from foreign retaliation a moderate or significant risk. The vessel is near the port of Dalian, according to ship-tracking data. "As a farmer, I know we have a lot to lose, but I think our country, as a whole, has a lot to gain from it".

USA equities marched higher after monthly jobs data showing a 213,000 gain in non-farm payrolls in June and stable wage growth. That means U.S. apple prices could take a serious dive, costing growers money.

There are fears that the tariffs will hit United States jobs as well.

Daimler, the carmaker behind Mercedes-Benz, already warned last month that its profits will fall this year.

President Trump has argued the tariffs are necessary to correct decades of unfair trade practices and compel China to change its policies.

"Normally, if your papers are in order, the pork proceeds smoothly through customs and into the country", he says.

"If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said, then it's going to have a big impact for both countries", said Feixiang.

Chinese officials reject accusations they steal or force foreign companies to hand over technology.

"If we continue to see prices at this level, farmers will be forced out of business", said Blake Hurst, president of the Missouri Farm Bureau Federation.

China's Premier Li Keqiang said on a visit to Sofia that "A trade war benefits no-one because it hurts free trade and the multilateral process".

Other US industries that were hit with export taxes include meats, fruit and vegetable growers, dairy farmers, tabacco, pet products, and seafood.

China immediately implemented retaliatory tariffs on USA imports worth roughly the same amount per annum.

Correction: An earlier version of this article misstated the number of top soybean producing states that voted for Hillary Clinton in the 2016 election.