Trump Threatens Tariffs On $200 Billion Of Chinese Goods

Trump Threatens Tariffs On $200 Billion Of Chinese Goods

Troy Powers
June 22, 2018

"If China takes any actions to harm our companies operating in China or otherwise try to harm any corporate entity, farmer, ranch or whatever, those constitute actions which aren't acceptable and this president will have the back of Americans whether they're here on a farm in Iowa or Shanghai trying to operate".

The escalating conflict between the world's two largest economies has rattled markets and companies, which fear disruption to their global supply chains.

Economists think the size of Trump's newest trade threats risk putting an even bigger dent in the U.S. economy.

The White House has accused China of forcing USA companies to share advanced technology with Chinese partners as a condition of doing business there. A US-China trade war would not only destroy the economies of the two countries; it won't spare their trading partners.

If China looks to raise its tariffs on USA goods again, President Trump plans to tack additional tariffs on another US$200bn worth of goods.

Canada has pledged $16.6 billion in countermeasures to respond to US tariffs on Canadian steel and aluminum.

On Tuesday, U.S. President Donald Trump expanded his plan to impose tariffs on Chinese goods, increasing the stakes in an emerging trade war with Beijing.

Trump added: "These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced".

Trump is now threatening a 10 percent tariff on another $200 billion in goods.

"Therefore, today, I directed the United States Trade Representative to identify $200bn worth of Chinese goods for additional tariffs at a rate of 10%". He argued that the dispute will have "relatively small effects".

In a separate statement, Lighthizer said that he supported Trump's action and that his agency "is preparing the proposed tariffs to offset China's action".

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Trump added in a statement.

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In overseas trading, stock markets across the Asia-Pacific region moved significantly lower during trading on Tuesday.

The Dow Jones Industrial Average index was in the deep red shedding 338 points to 24,649, led lower by large caps exposed to the Chinese market.

For some companies, the exposure to China is far higher: USA tech giant Qualcomm generates 63 percent of its revenue in China and needs Chinese authorities to approve its takeover of semiconductor maker NXP.

The report said housing starts spiked by 5.0 percent to an annual rate of 1.350 million in May after tumbling by 3.1 percent to a revised rate of 1.286 million in April.

"This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the worldwide community", the Commerce Ministry said in a statement.

China's tariff threat caught USA producers off guard because it had been discussing buying more US energy and agricultural products to reduce its $375 billion trade surplus with the United States.

China has hiked its list of U.S. goods on which it said it would slap tariffs six-fold from a version released in April, but the value was kept at US$50 billion, as some high-value items such as commercial aircraft were deleted.

Analysts say the direct impact of the tariffs may be limited, especially for the US economy, which is in strong shape.

And U.S. companies have an increasingly sizable stake in the fast-growing Chinese market.

The tariffs would start to slow USA growth, economists warn. Oxford Economics estimates that if Trump imposed the $200 billion in duties and China responded in kind, US growth could slow by 0.3 percentage point next year.

Even if the amount subject to tariffs is raised to USD150bn, our rough calculations suggest it would not reduce global GDP by more than 0.2%.

However, none of the tariffs announced by the U.S. on Monday will take effect until industries and consumers have a chance to make their views known in a 60-day public comment period.