Trump ratchets up tariff talk as key week looms for trade

18 September, 2018, 10:44 | Author: Corey Lynch
  • The Donald Trump administration is for the first time publicly planning for a trade spat that drags into 2019 and possibly beyond

The Trump administration is imposing tariffs on $200 billion more of Chinese goods starting next week, escalating a trade war between the world's two biggest economies and raising prices on a range of consumer goods.

Collection of tariffs on the long-anticipated list will start 24 September but the rate will increase to 25% by the end of 2018, allowing United States companies some time to adjust their supply chains to alternate countries, a senior administration official said.

But Trump warned that "if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports".

"We stand ready to negotiate with China any time if they are willing to move towards serious talks to remedy trade problems", White House National Economic Council Director Larry Kudlow said Monday in NY.

In a pair of tweets, Trump continued to make the case that tariffs largely harm the countries that are taxed, saying the impact on the USA economy has been "almost unnoticeable".

The trade war between America and China has escalated, fuelling fears that the global economy could be dragged down.

An official Chinese newspaper called for more aggressive measures to "make American pain worse" following tariff hikes by both sides on $50billion of each other's goods.

So far in an ongoing trade war, China has matched new U.S. tariffs on goods.

That would mean imposing new taxes on all of the goods the United States imports from China.

Boats, TV sets, and cooper are among the list of imports covered by $200 billion in new tariffs against China that the Trump administration announced Monday. "I think it's going to work out very well with China", he said.

China has promised to retaliate against the move by adding tariffs ranging from 5 to 25 per cent on US$60 billion of U.S. products.




However, this latest round is the biggest to date, and unlike the earlier rounds this latest list targets consumer goods, such as luggage and furniture. In July, 25 percent tariffs on bearings and some Global Positioning System units took effect, and in August, Chinese-made e-bikes and e-bike motors were hit with a 25 percent tariff.

"It appears that the administration responded to some industry concerns, but for many American businesses and consumers this still represents a rapid acceleration of costs and much higher uncertainty", said Rufus Yerxa, president of the National Foreign Trade Council.

Now the State Department has warned that European companies are "on the railroad tracks" if they defy USA sanctions and firms that deal with the "enemy" will be barred from access to the U.S. financial system.

- China threatens retaliation, to cancel talks, if $200 bn tariffs imposed.

This will cut demand for these products (hurting the Chinese economy), and also probably drive up prices in U.S. shops (hurting Americans).

The tough talk follows reports China is deliberately reducing exports to the U.S. by slowing down customs approvals and stepping up environmental and other inspections. "The unilateral and hegemonic moves by the United States will meet firm countermeasures from China.China will not just play defense", the Global Times says.

The benchmark USA 10-year note US10YT=RR last fell 1/32 in price to yield 2.9977 percent.

However, senior administration officials told reporters the initial list announced in July was reduced by 300 product lines after the administration received 6,000 written comments from consumers and businesses.

In theory, the tariffs will make US-made products cheaper than imported ones, and so encourage consumers to buy American. Japan has informed the WTO that it plans to impose retaliatory measures on United States goods to the tune of 50 billion yen (US$455 million).

The tariffs also highlighted the importance of regional trade agreements such as the CPTTP (trans-Pacific trade) agreement and New Zealand's arrangements with Europe "because they of course give New Zealand protection against this sort of thing happening to us", Parker said.

Such a move, the official said, is not an effort to constrain China.

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