Wednesday, 18 July, 2018

Why China Is Losing the Trade War

Melinda Barton | 11 July, 2018, 23:37

The Trump administration pushed ahead with plans to impose tariffs on additional $200 billion in Chinese products by releasing a list of targets, marking a sharp escalation in a trade war between the world's two largest economies.

China's government has criticised the latest United States threat of a tariff hike as "totally unacceptable" and vowed to retaliate in their escalating trade war. China, for example, exports far more to the US than the USA exports to China, resulting in Beijing's trade surplus of $375.2 billion in 2017. It's unclear what that action could include.

USA stocks extended losses on Wednesday, set to snap their four-day winning streak, and metals prices slumped as US threats of tariffs on an additional $200 billion worth of Chinese goods pushed the world's two biggest economies closer to a full-scale trade war.

High-level talks between the two countries starting in May had failed to deliver a breakthrough to head off a trade war.

However, Mr Lighthizer also opened the door again to a negotiations with China before the latest round of tariffs take effect. The latest list hits items that USA households buy, including electric lamps, apple juice and fish sticks.

Just when the Dow Jones seemed poised to break past 25,000, news of an extra $200 billion in tariffs on China knocked it back down, and the media is in an absolute frenzy.

The Commerce Ministry on Wednesday gave no details, but Beijing responded to last week's U.S. tariff hike on $34 billion of imports from China by increasing its own duties on the same amount of American goods.

Yu said China can also buy more rapeseed, sunflower seeds, and bring in more soybean meal, rapeseed meal, sunflower meal and fishmeal to fill any supply gaps.

US President Donald Trump has raised the stakes in the potential US-China trade war.

"Tonight's announcement appears reckless and is not a targeted approach", said Senate Finance Chair Orrin Hatch in a statement.

Beijing described Washington's latest threat as "totally unacceptable", saying it would hurt the world.

"China is showing no signs of backing down and instead looks like it is preparing for a drawn out conflict", said Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington.

U.S. Trade Representative Robert Lighthizer said in a statement that this is "an appropriate response", as China has for years "pursued abusive trading practices with regard to intellectual property and innovation".

"China stands in line with the global community on the correct side of history to together protect the rules of the multilateral trade order", foreign ministry spokeswoman Hua said on Wednesday.