US President Donald Trump's $200b tariffs to hit China, retaliation expected

18 September, 2018, 07:08 | Author: Billie Castillo
  • US President Donald Trump continues to pursue an aggressive economic policy towards Asian powerhouse China

US stock futures and Asian shares fell on Tuesday after US President Donald Trump said he will impose tariffs on an additional United States dollars 200 billion worth of Chinese imports, in a sharp escalation of the trade conflict between the world's two biggest economies.

The United States has announced fresh tariffs on $200 billion (€171 billion) of Chinese goods, spooking markets anxious about an escalating tit-for-tat trade war between the world's largest economies.

A 10 percent tariff will go into effect September 24, the president said in a statement, and increase to 25 percent on January 1, 2019. The timing will partially reduce the toll of price increases for holiday shoppers buying Chinese imports in the coming months.

Trump also threatened to add tariffs on about $267 billion of additional imports if China retaliates against USA farmers or other industries.

Trump defended his policies in an early-morning tweet on Monday, writing: "Tariffs have put the U.S.in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been nearly unnoticeable". China's economy is slowing, with consumers holding back and infrastructure spending dropping sharply.

USA companies have already said they are anxious about the effect of higher costs on their businesses.

'Only knowing the pain of fighting will stop the war and cause (the United States) to negotiate seriously, ' said Lou.

An afternoon recap of the day's most important business news, delivered weekdays.

"The Trump administration is yet again sending a perplexing mixed message by inviting Chinese officials for negotiations and then imposing additional tariffs in the run-up to the talks", said Eswar Prasad, former head of the International Monetary Fund's China division.

At the moment it seems uncertain how much longer current trade tension will continue, but it seems that it has undoubtedly slowed down in comparison to the prior few months as both parties seem to now at least be seriously looking to a resolution to the current trade battles.

Trump to unleash another $280b of tariffs on China
His comment tempered cautious optimism among investors over the US government's proposal for another round of talks with Beijing. Corporate executives increasingly believe the trade dispute can only be resolved by direct talks between Trump and Xi.

But while the tariffs are aimed at hurting China, they could hamper the U.S. economy and bring pain for consumers.

For the first time in 70 years, Americans have found themselves the "outliers" on the world trade stage, said Michael Kantor, who served as USA trade representative in the Clinton administration from 1993 to 1996.

USA officials say those violate Beijing's market-opening commitments and worry they might erode United States industrial leadership.

Economists warn the tariffs could chip away at United States economic growth. Then last month, the escalating trade war moved up a gear when the USA brought in a 25 percent tax on a second wave of goods worth $16b.

"Consumers not China's will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen".

Trump also proclaimed the US steel industry the 'talk of the World'.

China has vowed to retaliate further against any new U.S. tariffs, with state-run media arguing for an aggressive "counterattack". But it is unclear whether Beijing will agree to come to Washington with the new tariffs set to go into effect.

National Economic Director Larry Kudlow said that he doesn't believe Republicans' second round of tax cuts will pass before the midterm elections in November.

China wants talks based on 'mutual trust, ' said a foreign ministry spokesman, Geng Shuang.

Beijing has said it would retaliate to trade war escalation with tariffs of its own as well as qualitative measures, which it has not specified but are perceived within the USA business community as likely to include increased customs and regulatory scrutiny.

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