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Daily Trends Now

Trump Threatens Further $100bn in Tariffs Against China, Beijing Ready to Respond

Trump Threatens Further $100bn in Tariffs Against China, Beijing Ready to Respond

A fundamental principle of trade wars is that there's only one group of beneficiaries, but two groups of victims. "The best possible outcome is for both sides to come to the table and work out their disputes in a transparent fashion".

The odds are still good that the trade tiff ends with China giving Trump some small to moderate concessions before the full-blown tariffs take effect. China hit back hard today, targeting politically sensitive goods like soybeans, automobiles and aircraft with retaliatory duties.

But top White House economic adviser Larry Kudlow reversed himself and warned that the tariff threat is not a negotiating tactic.

"Economic data and forecasts from the IMF, OECD, World Bank and others have been revised steadily upwards over the past year, which would tend to indicate a sustained recovery of trade in 2018 following strong trade growth in 2017", Agah said.

There's consensus across the political spectrum that something needs to be done with China, but tariffs make many uneasy, especially in the GOP. The Brookings Institution has a great map showing how dependent various regions' economies are on exports.

North Alabama is particularly vulnerable. Other U.S. carmakers such as General Motors and Ford Motor also manufacture in China. China bought $130 billion worth of U.S. goods in 2017, making it the third-largest market for our exports, behind only Canada and Mexico. Trump's taxes on power-generating equipment will hurt companies that build and operate power plants, while raising prices for electricity consumers.

According to the expert, historically, many trade wars have led to actual wars. This is not a solicitation of any order to buy or sell any market.

All of this was predictable, and the threatened tariff on soybeans in particular could sting. The Trump-Xi Trade War of 2018 would be something of a test for those theories. "Therefore, I am not of the opinion that trade wars can be 'won, '" the economist told RT. His statement comes amid a turbulence in financial markets after Washington imposed a 25% duty on 1,300 Chinese products.

The real battle will come when America decides not to allow China to dominate the industries of the future by flaunting the rules that have governed the worldwide trading system since the end of World War II. Any and all of these changes would end up making global trade freer in the long term.

The US measures mainly goods that allegedly benefitted from China's theft of US intellectual property.

Speaking on CNBC, Mnuchin said Trump is not aiming to provoke a conflict with China, but he is determined to defend United States interests and "there is the potential of a trade war".

USA farmers, too, stand to lose their biggest trading partner. China's tariffs, if enacted, would double the current levy on US cars, to 50 percent.

Krugman was anxious about Chinese imports reducing aggregate demand - now that the recession is over, he no longer supports a trade war.

"As far the market size of the USA is concerned, the UAE is not contributing to even one per cent of U.S. imports of steel estimated at 37 million tonnes in 2017". It is also "working with allies also affected by China's unfair behaviour to restore fairness to global trade". But I wouldn't bet on it.

China is likely to offer some opening in industries that it considers of little strategic importance, such as automobiles and finance, but whether it offers the more fundamental reforms that many in the USA desire is another question. On Thursday, Trump told the USA trade representative to look for $100 billion more.


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