Friday, 16 November, 2018

President Trump Slaps China With Additional $200 Billion Tariffs

The Donald Trump administration is for the first time publicly planning for a trade spat that drags into 2019 and possibly beyond The Donald Trump administration is for the first time publicly planning for a trade spat that drags into 2019 and possibly beyond
Nellie Chapman | 18 September, 2018, 09:56

China's Foreign Ministry said it welcomed the invitation, but Trump later raised questions about it, saying on Twitter that he was under no pressure to make a deal with Beijing and that the United States "will soon be taking in Billions in Tariffs & making products at home".

If the administration pursues what it calls "phase three" of the tariff strategy, it would raise the total value of affected Chinese goods to $517 billion - covering almost everything China sells the United States.

The move, which sees $200 billion worth of Chinese imports slapped with a ten percent levy, comes amid a deepening trade spat between the world's two largest economies. "It is hard to see what the administration's vision of an endgame might be other than total capitulation by China to all USA demands".

The move is aimed at pressuring China to change long-standing trade practices that Trump says are hurting USA businesses at a moment when the administration believes it has an advantage in the trade dispute.

U.S. and China officials had discussed a new round of talks over the past week, but Mr Trump's latest move is likely to sour relations further. It will cost jobs and economic growth even though China is now far less reliant on exports than it once was.

"After a thorough study, the USTR concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property - such as forcing United States companies to transfer technology to Chinese counterparts", Monday's statement read. "Exciting!" Trump said in a tweet on September 8.

Larry Kudlow, director of the National Economic Council, speaks during a meeting at the Economic Club of New York, Sept. 17, 2018, in New York. The White House had no immediate comment on Monday.

A Treasury spokesman did not immediately respond to a query on the status of the China talks invitation.

Chinese Vice Premier Liu He is set to convene a meeting in Beijing on Tuesday morning to discuss the government's response to the United States decision, Bloomberg News reported, citing a person briefed on the matter. "They want to make a deal".

"Our concern with these tariffs is that the USA will be hardest hit, and that will result in lower United States growth and competitiveness and higher prices for U.S. consumers", Apple said in a letter commenting on the proposal.

Initial reaction from the business community Monday was unfavourable. "Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection". But it is unclear whether Beijing will agree to come to Washington with the new tariffs set to go into effect.

Jim O'Sullivan, chief economist for High-Frequency Economics, said financial markets would likely adopt a "could have been worse" reaction to the latest tariffs.

Apple had said the U.S. tariffs would affect prices for a "wide range" of Apple products, including its Watch, in a letter commenting on administration proposals earlier this month.

In fact, tariffs are taxes that are paid by Americans who import goods from overseas.

"If the tariffs go to 25 percent at the beginning of the year, you will have had nearly six months to get your business ready for that", a senior administration official told reporters on Monday. More than 300 products were removed from that list - including smartwatches, health and safety devices and children's playpens. Apple won waivers for several of its popular consumer products including the Apple Watch.

Countries such as New Zealand that stood up for "dependable rules-based systems" needed to engage with the Trump administration more, he said. The Chinese slowdown is expected to worsen as the U.S. tariffs ramp up. He said in July that he was "optimistic" that the USA and China would come to a resolution. "These supply chains are incredibly complex and the disruption will be inflationary", he said.

Apple shares fell 2.6 per cent, amid concerns it might be caught in the middle of an escalating trade war.

Excluding fuel, import prices rose just 1.3 per cent over the past year, according to the Bureau of Labor Statistics. China has promised to retaliate.