Sorry Donald, no one is going to 'win' your trade war

Marco Green
July 9, 2018

Beijing insists it's the injured party. Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China now maintains a 25 percent tariff on cars from the United States.

The negotiations began in August but have stalled over USA demands created to discourage investment in Mexico and to shift auto production back to the United States.

China's Commerce Ministry said it would be "forced to make a necessary counterattack". This ship, carrying tons of US soybeans, had been racing against the clock across the sea, trying to arrive in Dalian port before the tariff war started.

China's retaliatory targets include soya beans, which will hit agricultural communities usually loyal to the president, as well as cotton, corn, tobacco and cars.

The U.S. goods trade deficit with China increased significantly in May, a Commerce Department report showed on Friday, as the United States and China lunged into a tit-for-tat trade war ignited by President Donald Trump. Instead, he should be talking about reciprocity and allowing American companies the same rights in China that America grants Chinese companies when they try to invest and operate in the United States. "Soybean demand is there, and it's really, really big as soybeans go into different channels".

After that, the hostilities could intensify: Trump said the United States is ready to target an additional US$200 billion of Chinese imports - and then US$300 billion more - if Beijing does not yield to USA demands and continues to retaliate. What galls them most is the president's justification: Using a little-used weapon in USA trade law, he has declared that the imported metals are a threat to America's national security. He said another $16 billion of goods could follow in two weeks, suggesting that the final total could eventually reach $550 billion.

German Chancellor Angela Merkel, seeking to avoid a trade war, has expressed support for eliminating the EU's auto tariffs.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

Consumer Technology Association: "While President Trump says his trade policy is meant to punish China, the numbers show that, in reality, USA businesses, workers and consumers will pay the price under this policy", said Sage Chandler, the group's vice president for worldwide trade.

Beijing hit back on Friday with tariffs worth $34bn and has said it will match Trump's $50bn threat. Trump has threatened to hit back with vehicle tariffs of 20%, which would be highly damaging for the German auto industry.

"I don't see this ending well", she said. The damage could also spread to other economies, hurting business confidence and prompting companies to delay investments.

While Bank of America Merrill Lynch analysts said the chances of the trade war escalating were "modest", it couldn't rule out "a full-blown, recession-inducing 'trade war'".

"We urge the two governments to come back to the negotiation table", said Zarit. For example, the USA government wants China to rein in government subsidies for policies like "Made in China 2025", which seeks to pump hundreds of billions of dollars into industries such as robotics, electric cars and computer chips with the aim of becoming a global leader.

The Trump administration has already threatened to raise the stakes.

Other reports by Click Lancashire

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