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China, Trade, and Technology

06 August, 2018, 06:31 | Author: Melinda Barton
  • Here's Why Trump Is Hiking Chinese Tariffs To 25%

The Trump administration has already slapped a 25 percent tax on $34 billion in Chinese products, is readying levies on another $16 billion and has threatened tariffs on $200 billion more.

In another television interview, Kudlow laid emphasis on the agreement between Trump and European Commission president Jean-Claude Juncker for joint action in the World Trade Organisation over China's alleged technology theft and the subsidising of key industries.

But China is somewhat limited with the extent of what tit-for-tat trade measures are at its disposal, as it exports far more goods to the U.S. than it imports. One of the biggest targets of the China tariffs has been farmers; Beijing is the biggest buyer of US soybeans, importing more than $12.4 billion worth of the oil seed in 2017, according to the Peterson Institute for International Economics.

Trump suggested that his use of tariffs has directly damaged the Chinese economy, something that he said would continue unless they agreed to his demands, which includes allowing more USA exports and investments.

"The United States was allowed to get truly ripped off", Trump said earlier in the week.

"China's differential tax rate countermeasures are rational and restrained", the Ministry of Commerce said in a separate statement on its website.

Then there is what China says and on Thursday, Beijing urged the United States to "calm down" and return to reason after news that Trump may hike the tariffs from 10% to 25%.

The People's Bank of China will impose a reserve requirement of 20 percent on some trading of foreign-exchange forward contracts, according to a statement on Friday evening.

"We do have significant exports to China, especially in mechanical machinery and electrical machinery", said Mousa Kassis, director of the Export Assistance Network at Youngstown State University.

The trade deficit with China rose by nearly 1% to $33.5bn.

Trump apparently believes he can control the response of United States trading partners to his threats and intimidations, and that he can conclude token trade deals, if necessary, to avoid falling over the trade cliff of currency devaluations.

The Chinese reaction is sure to ratchet up tensions with the Trump administration at the end of a week that saw stock markets rattled by the intensifying trade battle.

Speaking just hours after China unveiled the countermeasures on Friday, Larry Kudlow, Trump's chief economic adviser, said the United States president was willing to follow through with his threats, in a stark warning to Beijing.

Trump went to Lewis Center, Ohio, to stump for Troy Balderson. They better not assume anything. That means it will buy more soybeans from Brazil, and so Europe will have to buy more from us. This makes the products more expensive and less attractive for USA consumers. From Apple to General Motors, a long list of large USA enterprises have transferred extensive operations to China and could be vulnerable to any response from Beijing.

China, however, shows no sign of bending to Washington's pressure.

Last month, the White House offered government assistance to farmers hurt by the trade dispute.

Still, two senior diplomats did meet earlier on Friday, on the sidelines of a regional summit in Singapore.

"We are willing to resolve the concerns of both sides via talks on the basis of an equal footing and mutual respect. The point at which both sides can sit down and talk will be reached when they are exhausted and need a break from the trade fight", he said.

The result is that both China and the USA are now using government funds to stimulate areas of the economy.

In Friday's announcement, China said it is readying tariffs on United States items that include agriculture and energy products, leather and machinery.

The market is not large by value compared with approximately $12 billion of USA crude that came to China past year, but LNG imports could shoot up as Beijing forges ahead with its plan to switch millions of households to the fuel away from coal as part of its battle against smog.

Meanwhile, the deficit declined with Japan but that came amid an overall decline in trade between the world's largest and third-largest economies.

Through the first six months of 2018, the goods trade deficit with China hit $185.7 billion, up from $171.1 billion in the first six months of 2017. It's a "race to the bottom that will harm American consumers, farmers and usa industry".

Chinese officials have suggested in recent weeks that if the United States proceeds with tariffs on a very wide range of Chinese goods, Beijing may also retaliate against the Chinese-owned operations of big USA companies.

A lot of Republicans in Congress will tell you that they support President Donald Trump but disagree with him about trade. Helicopters with an empty weight of less than 2 tonnes were also on that list.

Noticeably absent from the latest list is polysilicon, the main ingredient in solar cells, which the US does export to China.


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