Abril 22, 2018

Turning facts on China-US trade upside down makes no sense

08 Abril 2018, 09:02 | Benedicto Grullon

In a trade war, it's mostly losers

Small soybean plants growing in cultivated field

Trump repeatedly said during his election campaign that he would get tough with Beijing, but Thursday's announcement was greeted with barely concealed horror, even among his own Republican Party.

Trump on Thursday instructed the US Trade Representative's Office to consider tariffs on an additional $100bn in Chinese imports, bringing to $150bn the range of Chinese goods under consideration. The Chinese list Wednesday included soybeans, the biggest US export to China, and aircraft up to 45 tons (41 metric tons) in weight.

The markets reacted negatively to the growing confrontation, with the S&P 500 Index down 1.1% as of 11:52 in NY on Friday.

Responding on Friday, China's ministry of commerce said it would immediately retaliate if the "arrogant" USA imposed the sanctions.

The US trade deficit with China rose to $375 billion in 2017 out of a total of $566 billion. Only about one-tenth of China's goods exports to the United States would be affected.

"So far, at least, this is relatively minor", he said. "So we may take a hit and you know what, ultimately we're going to be much stronger for it".

On Tuesday, USTR proposed 25% tariffs on more than 1,300 Chinese industrial and other products from flat-panel televisions to electronic components.

The Chinese government said it has "heard what the United States has said" about tariffs and is monitoring the USA government's next moves.

As Trump prepares to impose $60 billion in tariffs against Chinese products, China warns of severe repercussions.

The additional duties on USA products apply to numerous horticultural products including apples, cherries, citrus, almonds and pistachios. China rejects the charge.

"Electronics have always relied on the global market, so if the global market becomes a problem, it could affect China's 2025 initiative", he said.

"Adding more tariffs would be both stunning and ill-informed", the FDRA, which helped to spearhead the footwear industry's efforts to combat additional tariffs, said in a statement.

Earlier in the day, Chinese state media had slammed Trump's threat of more trade action as "ridiculous".

Trump has also pushed for a crackdown on China's theft of USA intellectual property, and he criticized the World Trade Organization, an arbiter of trade disputes, in a tweet Friday for allegedly favoring China.

His critics doubt that national security concerns are at the core of the measures, however, and Trump himself implies that the tariffs are created to punish China for what the president considers an unfair trade relationship.

According to UBS, the initial list of tariffs put forward by the Trump White House on more than 1,300 goods would have a near-negligible effect on USA inflation.

This spat - ostensibly for Beijing's alleged theft of intellectual property and technology - is just one front in the ongoing trade tussle. The list of products hit by trade tensions between the United States and China increases nearly daily.

The measure constitutes an electoral risk for Trump as he approaches mid-term elections, as soybeans are cultivated in states that voted for him in 2016, including Texas, Oklahoma and Kansas.

"You have to go after the people who aren't treating you right", Trump said. "We have to have some balance".

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