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U.S.-China trade war escalates as new tariffs kick in

36 Comments
By Michael Martina and David Lawder

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other's goods, even as mid-level officials from both sides resumed talks in Washington.

The world's two largest economies have now slapped tit-for-tat tariffs on a combined $100 billion of products since early July, with more in the pipeline, adding to risks to global economic growth.

China's Commerce Ministry said Washington was "remaining obstinate" by implementing the latest tariffs, which kicked in on both sides as scheduled at 12:01 p.m. in Beijing.

"China resolutely opposes this, and will continue to take necessary countermeasures," it said in a brief statement.

"At the same time, to safeguard free trade and multilateral systems, and defend its own lawful interests, China will file suit regarding these tariff measures under the WTO dispute resolution mechanism," it said.

President Donald Trump has threatened to put duties on almost all of the more than $500 billion of Chinese goods exported to the United States annually unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programmes and tariff structures, and buys more U.S. goods.

That figure would be far more than China imports from the United States, raising concerns that Beijing could consider other forms of retaliation, such as making life more difficult for American firms in China or allowing its yuan currency to weaken further to support its exporters.

Trump administration officials have been divided over how hard to press Beijing, but the White House appears to believe it is winning the trade war as China's economy slows and its stock markets tumble.

"They're not going to give that up easily. Naturally they'll retaliate a little bit," U.S. Commerce Secretary Wilbur Ross said on CNBC on Wednesday at a Century Aluminum smelter in Hawesville, Kentucky, which is restarting idled production lines due to Trump's aluminium tariffs.

"But at the end of the day, we have many more bullets than they do. They know it. We have a much stronger economy than they have, they know that too," Ross said.

Economists reckon that every $100 billion of imports hit by tariffs would reduce global trade by around 0.5 percent.

They have assumed a direct impact on China's economic growth in 2018 of 0.1-0.3 percentage points, and somewhat less for the United States, but the impact will be bigger next year, along with collateral damage for other countries and companies tied into China's global supply chains.

The tariffs took effect amid two days of talks in Washington between mid-level officials from both sides, the first formal negotiations since U.S. Commerce Secretary met with Chinese economic adviser Liu He in Beijing in June.

Business groups expressed hope that the meeting would mark the start of serious negotiations over Chinese trade and economic policy changes demanded by Trump.

However, Trump on Monday told Reuters in an interview that he did not "anticipate much" from the talks led by U.S. Treasury Under Secretary David Malpass and Chinese Commerce Vice Minister Wang Shouwen.

Trump's hard line has rattled Beijing and spurred rare criticism within the highest levels of China's ruling Communist Party over its handling of the trade war, sources have said.

Beijing has denied U.S. allegations that it systematically forces the unfair transfer of U.S. technology and has said that it adheres to World Trade Organization rules.

The official Xinhua news agency said in a commentary on Thursday that China approached the latest round of talks in good faith, but that Washington remains vague about what it wants.

"As U.S. President Donald Trump said in his book on making deals, 'the point is that you can't be too greedy.' The two sides would hence be advisable to define their top concerns in this round of talks and outline a roadmap, in a bid to find a way out of the current impasse and towards the final settlement of the issues."

Washington's latest tariffs apply to 279 product categories including semiconductors, plastics, chemicals and railway equipment that the Office of the U.S. Trade Representative has said benefit from Beijing's "Made in China 2025" industrial plan to make China competitive in high-tech industries.

China's list of 333 U.S. product categories hit with duties includes coal, copper scrap, fuel, steel products, buses and medical equipment.

Though it is too early for the trade battle to show up in much economic data as yet, tariffs are beginning to increase costs for consumers and businesses on both sides of the Pacific, forcing companies to adjust their supply chains and pricing, with some U.S. firms looking to decrease their reliance on China.

One executive at a major U.S. manufacturer in China told Reuters the uncertainty about the duration of the trade conflict was more damaging than the tariffs themselves because it made business planning difficult.

If the tariffs are in place for long, there will come a point at which the company would begin moving some sourcing and production out of China, a process that would be irreversible for several years once set in motion, the executive said, declining to be identified due to the sensitivity of the matter.

© (c) Copyright Thomson Reuters 2018.

©2018 GPlusMedia Inc.

36 Comments
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BoycottMadeInChina
1 ( +11 / -10 )

Why ? it used to be boycott "Made in Japan". America won't win this tariff war with the rest of the World, only Trump believes it will.

-1 ( +13 / -14 )

America will definitely win in the end.

-8 ( +7 / -15 )

BoycottMadeInChina

Good luck with that, consider most everything is partially made in China these days.

America will definitely win in the end.

Kind of like how Trump said China would never retaliate with their own tariffs, right? Well we all saw how accurate he was with that.

America will not win, for a few reasons. The main reasons though are that China strictly controls the media, resulting in a populace who strongly support the government, with a government that doesn't need to worry about re-election. Trump, if he manages to stay out of jail, will need to be re-elected. Two years into a trade war where everything is more expensive, and millions are out of work as a result of said war, will be facing a populace more than half of which hated him before the trade war, with so many more bitter two years into it. If he does end up in jail, there is no way whomever follows will continue the war - even the Republicans hate it. Trump being removed from office will provide the perfect opportunity for Pence to end the ridiculous campaign by the disgraced president.

Trump: "winning trade wars is easy", says the guy who is currently losing all his trade wars.

7 ( +10 / -3 )

Why ? it used to be boycott "Made in Japan". America won't win this tariff war with the rest of the World, only Trump believes it will.

Japan was on the path to liberal democracy and an American ally.

China is neither. Comparing apples and oranges, again.

5 ( +11 / -6 )

 Trump being removed from office will provide the perfect opportunity for Pence to end the ridiculous campaign by the disgraced president. Im sure Trump has dreams of congress making him POTUS for life. lol

2 ( +2 / -0 )

Tariffs war seem to get nowhere. Stagnation would affect both countries and the rest of the world from next year. Trump might make America worst if this tariffs war escalates.

0 ( +1 / -1 )

Something has to be done about China' s systematic theft of our technology and expertise. Hop aboard the Chinese Shinkansen, chumps!

Unfortunately, the non-populist presidents and prime ministers have been firmly in the pockets of the globalist elite, who in turn are in the pockets of Beijing's Politburo. All of them are more than happy to watch the demise of the working classes in the developed world. Lower labor costs, don't you know. Too bad leaders other than Trump aren't willing to stand up for their interests.

Stagnation would affect both countries 

Stagnation is what's been happening to workers real wages in the developed world for the past couple of decades, ever since globalization took hold.

-1 ( +2 / -3 )

the US loses over 2 billion dollars a year in trade with China. We would save 2 billion if we halted all trade. The economy has never been better.

-1 ( +3 / -4 )

Trump will win this battle for fair trade, the odds are in his favor, China has much more to lose than the US.

China's economy is beginning to waver and the trend is . . . it will even get worse.

America's economy is on a high roll and the trend is . . . it will even get better.

-3 ( +2 / -5 )

Trump will win this battle for fair trade, the odds are in his favor, China has much more to lose than the US.

Nope, because China has already shown their leaders can put the people through extreme hardship (see the cultural revolution) and the people will bear the burden. Their leaders don't need electing.

The US cannot say the same. Trump needs to be reelected in two short years.

Or rather he would if he wasn't going to end up in a jumpsuit that matches his skin color before then.

1 ( +1 / -0 )

the US loses over 2 billion dollars a year in trade with China. We would save 2 billion if we halted all trade.

And you'd be out 2 billion dollars worth of goods that money would purchase.

You really think Americans are going to be satisfied without their iphones? Yeah, right.

1 ( +1 / -0 )

"Trump needs to be reelected in two short years."

Trump will be reelected, he has accomplished much for the American people, that will not be blinded by hate. Regardless of hateful comments the American people know the truth. The American economy is doing well and will continue to do so under Trump;s guidance.

-5 ( +0 / -5 )

Trump will be reelected, he has accomplished much for the American people

Already plants are shutting down because of Trump's tariffs. People are losing their jobs. Things are becoming more expensive. Remember, it's not the other country that pay Trump's tariffs, it's Americans who have to pay them. The more expensive things get, the more people will lose their jobs due to businesses becoming unprofitable through higher costs, removing profit margins. Already plants and factories are shutting down, or laying people off. And those people who are laid off will have less and less money to buy the things that are now costing more due to the added 'tax' of Trump's tariffs.

And while the Chinese will also feel the pain, they are not allowed to complain like Americans do, and they are not allowed to show displeasure through vote.

3 ( +3 / -0 )

I just can't see the logic in handing half a trillion dollars a year in exports to your number 1 strategic competitor, a country that not only boasts of displacing U.S industry in high tech through Made In China 2025, but also boasts of new weapons technology to destroy the U.S navy as a regular headline among other things.

It makes zero sense to me as a long term strategy. Zero.

Until I realize that its Wall Street and U.S Inc running U.S foreign and trade policy and half of them would sell their mother if there was a dollar in it. That, and the realization that many U.S citizens are no longer patriots and seem to care more about stoking partisanship than the future of their own country.

Then it all makes perfect sense.

6 ( +10 / -4 )

US corporate earnings are increasing at over 22%, productivity is finally increasing for the first time in over 10 years, wages are starting to rise, consumer spending is rising to support continuation of GDP growth, and consumer balance sheets are in good shape. Consumer confidence is at record highs.  Commodity prices have declined substantially. The US dollar remains high. It does not get much better than this.

-6 ( +0 / -6 )

US corporate earnings are increasing at over 22%, productivity is finally increasing for the first time in over 10 years, wages are starting to rise, consumer spending is rising to support continuation of GDP growth, and consumer balance sheets are in good shape. Consumer confidence is at record highs. Commodity prices have declined substantially. The US dollar remains high. It does not get much better than this.

Reminds me of the halcyon days of early 2008. And just remember how awesome things were at the start of 2009!

3 ( +3 / -0 )

"Already plants are shutting down because of Trump's tariffs. People are losing their jobs."

The truth is, industries are reopening in the US, more jobs, high employment. The truth is, America is on a high economic roll that is undeniable.

-5 ( +0 / -5 )

The truth is, industries are reopening in the US

And others are shutting down. Trump put a tariff on steel. This opened steel factories, but with Trump's added tax (tariff), a nail factory in Missouri has already had let go of 60 of 500 staff, and expect to have to let them all go by labor day, since they cannot afford the increased costs of steel.

Simplistic thinking leads those that are not intelligent enough to see that everything is connected to think that Trump's actions happen in a vacuum, and will not upset the balance. Sure, steel factories are opening, which is causing other factories to close.

The truth is, America is on a high economic roll that is undeniable.

Just like at the start of 2008!

1 ( +1 / -0 )

Until I realize that its Wall Street and U.S Inc running U.S foreign and trade policy and half of them would sell their mother if there was a dollar in it. That, and the realization that many U.S citizens are no longer patriots and seem to care more about stoking partisanship than the future of their own country.

You haven't realized it yet? There's your problem right there.

1 ( +1 / -0 )

In spite of the bitter hatred of Trump, by a few, the present majority of the American people support Trump and his policies to bring about fair trade for the US. If it takes a trade war to bring about fair trade, so be it. Trump will win.

-3 ( +1 / -4 )

the present majority of the American people support Trump and his policies to bring about fair trade for the US.

The majority of voters never even voted for Trump, much less the majority of Americans. 360 million people in the US, and less than 60 million voted for him. That's about 1/6 people, or 16.66%. Is that what you call a majority?

If it takes a trade war to bring about fair trade

Trade was already unfair in America's favor. Trump got greedy and decided he wanted more. Now the rest of the world is trading around America, while factories in America close, people lose their jobs, and prices get higher.

Trump will win.

Right now Trump will be lucky if he can stay out of jail.

2 ( +2 / -0 )

Right now Trump will be lucky if he can stay out of jail

More like, Mueller is running out of luck. Trump will never see the inside of a prison, now after his second term and he leaves office, he might be bogged down with frivolous lawsuits, but he has more than enough money to fight these insane lib lawyers, the only thing that may very well happen is, the man might have to pay out a lot of cash.

-4 ( +0 / -4 )

In spite of the bitter hatred of Trump, by a few, the present majority of the American people support Trump

ah sorry more fake news, Trump has never had over 50% voter support or job approval rating, his current average for all major poles sits at 42% to 52% disapproval, the highest its been is 45%. a larger minority didn't vote for Trump and a larger minority dont support him. Trump supporters are in the minority. there fixed that for you.

https://projects.fivethirtyeight.com/trump-approval-ratings/

2 ( +2 / -0 )

American economy is doing well and will continue to do so under Trump;s guidance.

yet the US deficit continues to rise and the debt ceiling will need to be risen again and probably many more times under Trumps watch

1 ( +1 / -0 )

> Kenji FujimoriAug. 23  03:50 pm JST

BoycottMadeInChina

Most products with Japanese and Korean brandnames are made in China as well as most cellphones :)

-1 ( +1 / -2 )

Trade was already unfair in America's favor.

That must explain America's large, perennial trade deficits.

-1 ( +0 / -1 )

That must explain America's large, perennial trade deficits.

It explains America having the strongest economy in the world.

Come on Jeff, you're an economist, don't tell me you've fallen for his BS that a trade deficit means they are losing. That's just ridiculous.

-2 ( +0 / -2 )

"The present majority of the American people support Trump and his policies to bring about fair trade for the US"

Did someone miss the words, 'the present majority'?

"360 million people in the US, and less than 60 million voted for him."

To vote in the United States of America, one must be of age. 360 million is no comparison. Also they must be American citizens that is of concern of the American people.

"Trade was already unfair in America's favor."

Not true, trade deficit statics do not lie.

-3 ( +0 / -3 )

Come on Jeff, you're an economist, 

What ! :)

-2 ( +0 / -2 )

"360 million people in the US, and less than 60 million voted for him."

360million people in the US , about 230million eligible age voters, 56% of those eligible voted in 2016

27.3% of eligible voters voted for Trump, 62.9million,

28.6% of eligible voters voted for Clinton 65.8million,

27.3% is still far shy of a majority if my math is correct

they must be American citizens that is of concern of the American people.

there is no evidence that large numbers of non-AMericans voted in 2016, to state this without any proof is just fake news and propaganda.

0 ( +1 / -1 )

Back on topic please. The subject is U.S.-China trade relations.

"Already plants are shutting down because of Trump's tariffs. People are losing their jobs."

The truth is, industries are reopening in the US, more jobs, high employment. The truth is, America is on a high economic roll that is undeniable.

The poster has no clue about the manufacturing situation of the US. There's no way that the US can produce many products Made in China or steel Made in the EU in the foreseeable future. There's no manufacturing grid, no educated and skilled workers to run them and the lack of technology to accomplish that and where they will face foreign Intellectual Property.

The Americans became sloppy with their manufacturing sector since the eighties [when Japan was ruling the waves] and what's left is merely a rust belt. The only exception are the industries that are part of the military industrial complex.

Boeing, also part of the MIC, is going to build a manufacturing site in China no matter what Trump says.

https://www.nytimes.com/2017/09/22/business/economy/military-industrial-complex.html

1 ( +2 / -1 )

@netgrump

There's no way that the US can produce many products Made in China or steel Made in the EU in the foreseeable future. 

"Short-term future" is what you want to say. The Japanese used to tell me the same narrative in the late 80s -- about the US no longer able to make decent electronics products, when I first visited Japan, and the US should cede the industry to Japan and be content being farmers, etc.

Then came Apple, Dell, Google, and the emergence of Silicon Valley, which blew away the Japanese competition and created a new industrial revolution. The turning point was the iMac G3 - manufactured in Cupertino, California, in the early, mid 90s. Plenty of Japanese consumers ditched their NECs and bought iMacs, including my girlfriend, LOL, ah the sweet irony.

"The Americans became sloppy with their manufacturing sector since the eighties...."

Precisely the time Washington adopted a more "market-based" approach to industry and trade. Japan, Germany, S. Korea,,,and China decided to stick with their national industrial policies, although Japan started to let go from the late 90s, and we know how that's gone.

@strangerland

"...don't tell me you've fallen for his BS that a trade deficit means they are losing."

Um, no, I didn't say that. The big US deficit largely underscores that US trading partners have national industrial policies, while the US does not. All of the major industrial financing in China is at under-market rates, to cite one example, thanks to the Communist - communist -- govt. China enjoys a set of artificial trade advantages that the US and others need to confront head-on.

I never said I'm an economist, although I hold an econ degree, but I am an actively working, published writer and editor on business and economics.

-1 ( +0 / -1 )

Then came Apple, Dell, Google, and the emergence of Silicon Valley, which blew away the Japanese competition and created a new industrial revolution. The turning point was the iMac G3 - manufactured in Cupertino, California, in the early, mid 90s. Plenty of Japanese consumers ditched their NECs and bought iMacs, including my girlfriend, LOL, ah the sweet irony.

How 'sweet' to see an 'anti-globalist' mentioning firms who thrive by globalism and keep most of the money offshore...

Mentioning an iMac G3, manufactured in California in 'the early, mid 90s' made me walk to my advanced coffee machine Made in Switzerland smiling..

-1 ( +0 / -1 )

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