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Interview: Trump's tariffs "counterproductive" to American economy, says expert

25 March, 2018, 00:45 | Author: Lydia Fleming
  • China might hike tariffs on US pork and other goods

The response comes as US President Donald Trump announced plans Thursday to impose $50 billion in tariffs on Chinese goods over alleged misuse of US intellectual property.

After Trump's decision on Thursday, a livid China announced 15-per cent tariff on products including fruits, nuts, wines and seamless steel tubes and a 25-per cent tariff on pork and recycled aluminum products.

Trump campaigned on promises to bring down America's trade deficit, which stood at $566 billion past year, by rewriting trade agreements and cracking down on what he called abusive commercial practices by US trading partners. Canada and Mexico already are not subject to the tax.

Why has the US chose to impose these economic tariffs on China?

The first shots have been fired in a trade war between the United States and China that threatens to affect us all.

"China doesn't hope to be in a trade war, but is not afraid of engaging in one", the Chinese commerce ministry responded in a statement.

Mr Trump has lifted tariffs on aluminium and steel imports to protect United States producers, although Australia and other close allies have won a reprieve. The proposed product list will include items in aerospace, information and communication technology and machinery.

Beijing unveiled a hit list of products that could face duties of up to 25 percent, from fresh fruit to pork and wine, though it stopped short of pulling the trigger as it indicated its readiness to negotiate an agreement.

Vice Premier Liu He told Mnuchin in a phone call that the order Trump signed Thursday violates global trade rules, China's official Xinhua News Agency reported.

Pauline Loong: The trade gap between the two countries has been a constant source of irritation for President Trump and no previous president has acted directly against China in recent years. He noted Beijing began a probe of USA sorghum in February after Trump announced the steel and aluminum tariffs.

It was meant for a world in which large swaths of global commerce were not covered by trade agreements as a way to open markets to USA goods, Chad Brown, a senior fellow at the Peterson Institute for International Economics wrote in a recent blog. "A number of participants reported about their conversations with business leaders around the country and reported that trade policy has become a concern", Federal Reserve Chairman Jerome Powell said this week, while cautioning that trade issues haven't changed the Fed's outlook. In addition, Trump will also direct the US Treasury to propose measures that could restrict Chinese investments in the United States, Eissenstat said.

The Trump administration is framing the move as a major turning point in US-China relations. The US concluded China engages in a range of violations, including policies that force American companies to transfer technology and the accessing of trade secrets through hacking, said Eissenstat. "We are confident and capable of dealing with any challenges".

"Donald Trump has said this is the beginning of a negotiation", Mr Turnbull said. "Worries about escalation therefore won't go away".

The United States has long said that intellectual property theft has cost the USA economy billions of dollars in revenue and thousands of jobs.

The tensions reflect the dueling nationalistic ambitions of Trump and his Chinese counterpart, Xi Jinping.

"I view them as a friend. The President has fought very hard for advancing opportunities, economic opportunities for American businesses, but also the American people", she said.

Since 2001, when China joined the World Trade Organisation, its economy has grown from United States dollars 1 trillion of GDP to USD 12 trillion; roughly an 800 per cent growth rate.

China is unlikely to respond until Washington acts but might launch an investigation of imports of USA corn and soybeans "as a warning shot", said Parker.



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