Here's the Only Way to Play President Trump's Trade Wars

Here's the Only Way to Play President Trump's Trade Wars

Kerry Wise
July 12, 2018

Mr. Trump hit US$34-billion worth of Chinese imports with 25-per-cent tariffs starting last week, with another US$16-billion worth to be added shortly.

Thousands of Chinese imports are under threat in the newly suggested tariffs, including hundreds of food products as well as auto tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.

There is a two-month period of public comment on the latest proposed list before the tariffs get imposed.

The earliest they would come into effect is September.

It also includes consumer goods ranging from auto tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.

Washington accuses Beijing of stealing or pressuring companies to hand over technology and worries plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.

The goal is to bring the total amount of Chinese imports up to 40 percent of the total imported from the Asian power, since the US products hit by Beijing's retaliation represent that share of exports, an official told reporters in a conference call.

"Tonight's announcement appears reckless and is not a targeted approach", said Senate Finance Chair Orrin Hatch in a statement. Trump has said he may ultimately target more than $500 billion worth of Chinese goods, the total amount of United States imports from China previous year.

If China responds with tariffs on energy, this could cut sales of US energy goods, analysts and executives told Reuters last month, when Beijing first threatened to slap tariffs on usa energy.

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"Unilateral actions that alienate long-standing US allies and close off the USA market to the rest of the world are not a recipe for economic growth and prosperity and are very unlikely to change China's unfair practices", ACC said.

As the trade war between the Unites States and China continues to escalate, Beijing has reportedly instructed its state run media to temper messaging on the issue.

The latest round of proposed tariffs come a few days after the USA government unveiled procedures for companies to apply for exclusions from the first round of tariffs, which went into effect July 6.

While disclosing a strategy of "splitting apart different domestic groups in U.S.", the notice explains: "The trade conflict is really a war against China's rise, to see who has the greater stamina".

The abrupt escalation is "totally unacceptable", said a Commerce Ministry statement.

The broad-based S&P 500 shed 19.82 points (0.71 per cent) to end at 2,774.02, while the tech-rich Nasdaq Composite Index lost 42.58 points (0.55 per cent) at 7,716.61.

Investors were wary of China response to the latest US tariff threat, as the country's assistant commerce minister said the proposed USA duties harm the World Trade Organization system and globalisation.

The US trade deficit in goods with China ballooned to a record $375.2bn a year ago, stoking Trump's anger. High-level talks between the two countries starting in May failed to deliver a breakthrough to head off a trade war.

Home furnishing retailers are expected to be hit particularly hard because China supplies 65 percent of USA furniture imports, according to analysts at Goldman Sachs.