Trump in tariff threat
- Author: Theresa Obrien Apr 09, 2018,
Apr 09, 2018, 0:46
Washington has published a target list of 1,300 items imported from China worth an estimated $50 billion that would be hit with an extra tariff of 25 per cent ("Notice of determination", USTR, April 3). If the United States carries out its threat of new tariffs, "China has already made ample preparations and will respond forcefully and without hesitation", he said.
The president accuses China of stealing US intellectual property and other violations of global trade rules. Laffer, who speaks with the president and his top economic advisers, said Trump told him the tariff threats were just a bargaining tactic.
Although the implementation of tariffs is still some time away, futures markets and the stock market have felt the effects. Most investors still seem convinced a last-minute deal can be reached without damaging the world's two largest economies. Canada, the biggest supplier of steel and aluminium to the USA, will bear the brunt of Trump's plans if they come to fruition, along with scores of other suppliers including the UAE and China. It must be remembered that no one wins in a trade war.
On Thursday night, President Trump called for another $100 billion in tariffs, which prompted the Chinese to vow to "fight back at any cost", a sign that the trade disputes will continue to hang over markets, unless either party balks in this high-stakes game of chicken. Neither Trump nor Chinese President Xi Jinping can afford to be seen to lose a trade conflict or make many concessions without securing something in return. The exports to China directly or indirectly supported 1.8 million new US jobs in 2015, according to the US-China Business Council.
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For years, American politicians have fretted about China's role as the United States' largest creditor; the nation has accumulated a huge stockpile of Treasury bonds over the last 20 years. There are plenty of possible options to settle the dispute. Officials on both sides have offered some reassurance that this is likely. There may be more tariffs to come. But the brinkmanship on both sides is more likely to cost Americans a pot of gold in disrupted trade and lost economic opportunity.
For that reason, our tri-state governors and congressional delegations (positions filled, by the way, with men and women of the same political stripe as Trump) should lead the way in urging the administration to begin walking the USA back from the brink of what promises to be a catastrophe for the Heartland.
If China were to suddenly unload some of its holdings, or even signal an intention to buy fewer dollar assets in the future, that would probably cause long-term interest rates in the United States to rise, at least temporarily.
"China is the problem".
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The move is a high-stakes gamble aimed at cowing China into backing down and forcing it to make the kinds of changes that the U.S. is seeking - namely reducing the coercive tactics American officials say Beijing uses to try to dominate leading-edge industries. Even with this level of awareness, however, the two countries have already blundered into the Thucydides Trap on trade. The competitive imposition of tariffs by the two economic superpowers to raise the entry barriers is fraught with unsafe ramifications for the global trade. Intensifying diplomatic competition also covers multiple regions including the South China Sea, Southeast Asia, the Indian Ocean, Central Asia, the Korean peninsula, Africa and Latin America.
Wall Street stocks finished sharply lower on Friday after escalating threats in the US-China trade spat deepened fears of an all-out trade war.
This illustrates a fundamental principle of trade wars - there's only one group of beneficiaries, but two groups of victims.
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