China's restrained new tariff 'rational' - USA

08 August, 2018, 21:02 | Author: Corey Lynch
  • Media playback is unsupported on your device                  Media caption The'danger of a US-China trade war

Beijing's latest salvo came after the Trump administration upped the ante in its plans for additional tariffs on Chinese goods worth $200 billion, suggesting the rate could be increased to 25 percent.

The latest Chinese tariffs would, if implemented, be up to 25 percent, and cover 5,207 tariff categories, the country's commerce ministry said in a statement on its website.

While Trump has taken credit for new steel jobs created with the help of tariffs, retaliatory measures by Beijing and others have rattled U.S. soybean farmers and the many companies reliant on increasingly expensive steel as a raw material.

The question is what other tools the two countries may use, once they have no more goods upon which to impose tariffs.

Speaking to Bloomberg TV yesterday, National Economic Council Director Larry Kudlow said: "We've said many times: no tariffs, no tariff barriers, no subsidies".

President Trump last week ordered officials to consider imposing a 25 percent tax on $200 billion worth of imported Chinese goods, up from an initial 10 percent rate. Yet while the Chinese public and private sectors invest in one another based on the principles of the cyclically prosperous market socialist model, the U.S. is now being forced to subsidise (aka pay) its own farmers whose industry has been partly stagnated during the early stages of the trade war on China.

China's exports are expected to have maintained solid growth in July despite new tariffs on billions of dollars of shipments to the United States, though the outlook has darkened as both sides raised the stakes in a trade conflict that has rattled financial markets. Another $16 billion in levies will likely follow in the coming days or weeks. The president has imposed tariffs on $85 billion worth of foreign goods so far, meaning that, at most, his tariffs would raise about $21 billion, a minuscule percentage (0.1 percent) of the debt.

"China promises that it will continue to unswervingly push forward reform and opening-up based on established arrangements and pace, firmly support economic globalization, firmly safeguard free trade rules and multilateral trade mechanisms to realize joint development and share prosperity with all countries that pursue progress", the commission said. China instead is threatening roughly two-fifths of its USA purchases after Trump threatened two-fifths of China's much larger exports to the United States, said Tu Xinquan, executive dean of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.




"Tariffs are working far better than anyone ever anticipated", he claimed, citing a big drop in China's stock market.

"Copper is a global market that depends much less on regional trade flows and therefore tariffs in any one region should not have a material impact on the market", Chris LaFemina, an analyst at Jefferies, said by telephone from NY.

But a flurry of articles in Chinese state media emphasised the resilience of China's economy and downplayed concerns about the impact of the Sino-U.S. trade war.

US Secretary of State Mike Pompeo (left) and China's Foreign Minister Wang Yi (right) before their bilateral meeting at the 51st Association of Southeast Asian Nations (ASEAN) in Singapore, yesterday.

Morgan Stanley has estimated annual Chinese imports of US LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017.

The ministry reiterated that since the USA has ignored the interests of companies and consumers in both countries, China has to take the necessary countermeasures to safeguard the dignity and interests of its people, defend free trade and the multilateral system, and ensure the common interests of all the countries of the world.

Answering a reporter's question about what was specifically said on trade, Wang said: "We did not speak in such details".

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