Trump heaps another 5% tariff on Chinese goods in latest tit-for-tat escalation

[rooster59]

Trump heaps another 5% tariff on Chinese goods in latest tit-for-tat escalation

By David Lawder and Se Young Lee

 

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China August 6, 2019. REUTERS/Aly Song

 

WASHINGTON/BEIJING (Reuters) - U.S. President Donald Trump on Friday lashed back at a new round of Chinese tariffs by heaping an additional 5% duty on some $550 billion in targeted Chinese goods in the latest tit-for-tat trade war escalation by the world's two largest economies.

 

Trump's move, announced on Twitter, came hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. goods, prompting the president earlier in the day to demand U.S. companies move their operations out of China.

 

The intensifying U.S.-China trade war stoked market fears that the global economy will tip into recession, sending U.S. stocks into a tailspin, with the Nasdaq Composite <.IXIC> down 3%, and the S&P 500 <.SPX> down 2.6%.

 

U.S. Treasury yields also declined as investors sought safe-haven assets, and crude oil, targeted for the first time by Chinese tariffs, fell sharply.

 

Trump's tariff response was announced after markets closed on Friday, leaving potentially more damage for next week.

 

"Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer," Trump said on Twitter. "As President, I can no longer allow this to happen!"

 

He said the United States would raise its existing tariffs on $250 billion worth of Chinese imports to 30% from the current 25% beginning on Oct. 1, the 70th anniversary of the founding of the communist People's Republic of China.

 

At the same time, Trump announced an increase in planned tariffs on the remaining $300 billion worth of Chinese goods to 15% from 10%. The United States will begin imposing those tariffs on some products starting Sept. 1, but tariffs on about half of those goods have been delayed until Dec. 15.

 

The U.S. Trade Representative's office confirmed the effective dates, but said it would conduct a public comment period before imposing the 30% tariff rate on Oct. 1.

 

U.S. business groups reacted angrily to the new tariff hike.

 

"It's impossible for businesses to plan for the future in this type of environment. The administration's approach clearly isn't working, and the answer isn't more taxes on American businesses and consumers. Where does this end?" said David French, a senior vice president for the National Retail Federation.

 

Trump is due to meet leaders of the G7 major economies at a summit this weekend in France, where trade tensions will be among the hottest discussion topics.

 

ABRUPT RESPONSE

 

The president's announcement, which followed an Oval Office meeting with his advisers, fits a pattern of swift retaliation since the trade dispute with China started more than a year ago.

 

"He decided he wanted to respond. He was given a few different options on things he could do and ultimately that was what he decided," a senior White House official said.

 

"He’s not taking this stuff lightly, but he’s in a fine mood and looking forward to the G7."

 

Another person familiar with the matter said officials had to scramble to come up with options after Trump caught them offguard with tweets promising a response in the afternoon.

 

Since taking office in 2017, Trump has demanded that China make sweeping changes to its economic policies to end theft and forced transfers of American intellectual property, curb industrial subsidies, open its markets to American companies and increase purchases of U.S. goods.

 

China denies Trump's accusations of unfair trade practices and has resisted concessions to Washington.

 

"We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP," Trump tweeted on Friday morning.

 

"Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA."

 

It's unclear what legal authority Trump would be able to use to compel U.S. companies to close operations in China or stop sourcing products from the country. Experts said he could invoke the International Emergency Economic Powers Act used in the past for sanctions on Iran and North Korea, or cut offending companies out of federal procurement contracts.

 

The U.S. Chamber of Commerce rebuffed Trump's call, urging "continued, constructive engagement."

 

"Time is of the essence. We do not want to see a further deterioration of U.S.-China relations," Myron Brilliant, executive vice president and head of the business group's international affairs, said in a statement.

 

Trump also said he was ordering shippers including FedEx <FDX.N>. Amazon.com Inc <AMZN.O>, UPS <UPS.N> and the U.S. Postal Service to search out and refuse all deliveries of the opioid fentanyl to the United States.

 

China's Commerce Ministry said that on Sept. 1 and Dec. 15 it will impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States and reinstitute tariffs of 25% on cars and 5% on auto parts suspended last December as U.S.-China trade talks accelerated.

 

It was unclear whether a new round of talks expected in September would go ahead.

 

China Daily, an official English-language daily often used by Beijing to communicate its message to the rest of the world, said China's tariff list is the result of "prudent calculation".

 

"With the U.S. proceeding at full throttle with its beggar-thy-neighbor policy, China has no choice but to fight back to protect its core national and economic interests," it said in an editorial on Saturday.

 

"China has taken the countermeasures so that U.S. decision-makers wake up and smell the coffee. And appreciate that until Washington follows the Osaka consensus, there can be no deal."

 

AGRICULTURE, AUTO SECTORS HIT

 

The growing economic impact of the trade dispute was a key reason behind the U.S. Federal Reserve's move to cut interest rates last month for the first time in more than a decade.

 

"The president’s trade war threatens to push the economy into a ditch," said Mark Zandi, chief economist at Moody's Analytics. "The president is hoping that the Federal Reserve will ... bail him out, but if he continues to pursue the war, the Fed won’t be up to the task."

 

Among U.S. goods targeted by Beijing's latest duties were soybeans, which will be hit with an extra 5% tariff starting Sept. 1. China will also tag beef and pork from the United States with an extra 10% tariff, as well as ethanol with an additional 10% duty from December 15.

 

Although the Trump administration has rolled out aid to farmers stung by China's tariffs, there is growing frustration in America's agricultural belt, a key political constituency for Trump as he heads into his 2020 re-election campaign.

 

"The view from much of farm country is bleak and anger is boiling over. With bankruptcies and delinquencies rising and prices falling, the frustration with the lack of progress toward a deal is growing," the bipartisan Farmers for Free Trade group said in a statement.

 

(Reporting by Judy Hua, Min Zhang, Se Young Lee, Stella Qiu, Hallie Gu and Dominique Patton in BEIJING, Yilei Sun and Winni Zhou in SHANGHAI, David Lawder, David Shepardson, Doina Chiacu, Jeff Mason, Steve Holland in WASHINGTON and Koh Gui Qing in New York; Additional reporting by Jason Lange, Andrea Shalal and Humeyra Pamuk in WASHINGTON and Tom Polansek and Julie Ingwersen in Chicago; Writing by Paul Simao; Editing by Alison Williams, Howard Goller and Sonya Hepinstall)

 

-- © Copyright Reuters 2019-08-24

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[billd766]

Definitely he has lost the plot, and the story line as well.

[neeray]

The ramifications of this trade war are much greater than I can comprehend (and probably same for most people). I can't quite figure out whether this is one of Trumps many testosterone-loaded personal little wars that he feels compelled to win or if he is truly adamant about correcting a decades-long trade imbalance with China.

Time will tell.

[jany123]

With less exports, China should raise prices on exports to compensate.... how funny would that be? ????

[from the home of CC]

 coupled with brexit and other events this looks recession wise, like a real bad one coming. I'm hoping he has a terminal illness crop up and thus save the world economy from this tsunami.. 

[Tug]

He very well may be the one who kills the goose who lays the golden eggs he needs an intervention or better yet article 25 (removed for beeing a mentally ill)

[Inn Between]

 

1 hour ago, jany123 said:

With less exports, China should raise prices on exports to compensate.... how funny would that be? ????

I don't think they've been taking lessons in economics from the Thais. 

 

 

[AlexRich]

The only positive is that by trashing the stock market and pushing the US into recession he’ll be a one term president ... winning.

 

The US tried tariffs before, during the 1930’s, with all the same clowns cheering them on ... towards the Great Depression.

[Jingthing]

30 minutes ago, Tug said:

He very well may be the one who kills the goose who lays the golden eggs he needs an intervention or better yet article 25 (removed for beeing a mentally ill)

He's surrounded himself with lackeys in his cabinet so forget Article 25.

[jany123]

1 hour ago, AlexRich said:

The only positive is that by trashing the stock market and pushing the US into recession he’ll be a one term president ... winning.

 

The US tried tariffs before, during the 1930’s, with all the same clowns cheering them on ... towards the Great Depression.

US tariffs against japan was also a significant contributor towards japan declaring war in 1941... but the trump thinks they are a winning strategy. Oops... wait one... the trump thinking ????????????

[tgw]

2 hours ago, jany123 said:

With less exports, China should raise prices on exports to compensate.... how funny would that be? ????

it would be a boon for other countries, especially the west

[Inn Between]

1 minute ago, tgw said:

it would be a boon for other countries, especially the west

The current US gov't tells us that 15% of its consumer goods come from China, but they're also quick to make a point of mentioning that those goods can be sourced from other countries to emphasize that they can do fine without Chinese imports. Whether or not that's true is questionable. 

[steffi]

His plan will be to hit people with pain now and just before the election they will magically make a deal and hope that everybody forgets how erratic the policy was and how it was always about a popularity contest.


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[AlexRich]

1 hour ago, steffi said:

His plan will be to hit people with pain now and just before the election they will magically make a deal and hope that everybody forgets how erratic the policy was and how it was always about a popularity contest.


Sent from my iPhone using Thaivisa Connect

I think that may be his thinking, but China may have other ideas, and prolong it through 2020 to get rid of him. They might start dumping US Treasury Bonds in the run up to the vote.

[Scott]

A misquoted post has been removed.   Do NOT  change a quote.

[ExpatOilWorker]

Remember Thailand 1997?

At the onset of the Asian Financial crises Thailand wasn't broke, they still had about $20 billion left in foreign reserve, which at the time was about 15% of their GDP. It just wasn't enough.

China's foreign reserve isn't that mighty any more and is fast approaching 20% of their GDP. Not sure they can afford to go much lower.

 

 

[legend49]

8 hours ago, Inn Between said:

The current US gov't tells us that 15% of its consumer goods come from China, but they're also quick to make a point of mentioning that those goods can be sourced from other countries to emphasize that they can do fine without Chinese imports. Whether or not that's true is questionable. 

It will be challenging where they get material from. Today he is having a fight with Johnson who claims the tariffs on UK stuff into US is very high, fighting with Germany on car imports and sacre bleu French wine heading for tariffs.

[spidermike007]

He jus becoming increasingly unhinged, and he is hellbent on destroying the economy. He seems to think that Xi, and the Chicoms will just cave. Not going to happen. The harder he pushes, the more entrenched they will become. He has a modest amount of skill. Enough to negotiate a deal on a small apartment building in NYC. He is in way over his head with China, North Korea, Russia, and the like. This guy is incompetent beyond the wildest nightmares of his supporters, and for those of us who did not support him, we just have to suffer through this nightmare scenario. 

 

When he says: "We don’t need China and, frankly, would be far better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP," Trump tweeted on Friday morning. He is wrong. The US needs China far more than China needs the US. The US is stradled with historic debt, and Trump is spending money like a drunken sailor. Projected deficit for 2019 is upwards of a trillion dollars. This from a guy who swore he would bring the deficit down. Nice job with that one. The Chinese debt, if you take into account local, state and federal obligations is about 46% of GDP. The US debt is well over 100% of GDP, and I am not even sure if that includes local and state debt.

 

The Chinese are sitting on trillions of dollars in cash and US backed securities. The US? Barely any cash at all and debt that is unsustainable in the long run. So, who needs who? I do not like the Chinese government. But, there is no question about them eclipsing the US, within our lifetimes. And Trump is feeding right into their plans. He is allowing them to court, and establish close relations with nations that the US is pushing away, with policy that is so fabulously ignorant, it boggles the mind. 

[neeray]

There are so many sides to this coin.

American consumers may just come to the realization that they don't really need all this disposable made-in-China junk that in many instances ends up in landfill a year or two later.

[samran]

Donnie increases taxes on his country and the rotting husk of once was known as the Republican Party cheers him on.

[billd766]

10 hours ago, steffi said:

His plan will be to hit people with pain now and just before the election they will magically make a deal and hope that everybody forgets how erratic the policy was and how it was always about a popularity contest.


Sent from my iPhone using Thaivisa Connect

But it takes 2 sides to make a deal.

 

What if China doesn't want to play his silly games?

[mrmicbkktxl]

 

[stevenl]

11 minutes ago, mrmicbkktxl said:

 

Her started with the notion that exporters pay for their exports and for the tariffs. Sorry, at that point I lost interest.

[metisdead]

A troll post containing a trolling representation of Trump's name has been removed. 

 

A troll post containing an offensive generalization toward Trump supporters has been removed. 

[mrmicbkktxl]

31 minutes ago, stevenl said:

Her started with the notion that exporters pay for their exports and for the tariffs. Sorry, at that point I lost interest.

Watch it to the end,the numbers are interesting

[jany123]

42 minutes ago, stevenl said:

Her started with the notion that exporters pay for their exports and for the tariffs. Sorry, at that point I lost interest.

Cheers... you saved me wasting time with this summation????

[jany123]

1 hour ago, billd766 said:

But it takes 2 sides to make a deal.

 

What if China doesn't want to play his silly games?

Chinese actions over the next 18 months will determine who will be the 2020 winner. They will install whoever is most favorable to him, much as Russia installed the trump. ????

[Emdog]

Current estimate is tariffs cost average family $800 per year (aka taxes increase). With his current moves, could be $1300.

Does anyone know what Trump's plan is? What he wants Chinese to do? Like getting in fight with wife & she says "You know what you did, you know what you need to do."

" "It's impossible for businesses to plan for the future in this type of environment. The administration's approach clearly isn't working, and the answer isn't more taxes on American businesses and consumers. Where does this end?" said David French, a senior vice president for the National Retail Federation. "

Hopefully businesses will say "Thanks for tax cut, now back in your cage". Lay down with dogs, you get rabies.

[Thomas J]

13 hours ago, from the home of CC said:

coupled with brexit and other events this looks recession wise, like a real bad one coming. I'm hoping he has a terminal illness crop up and thus save the world economy from this tsunami.

Home of CC Neville Chamberlain to "preserve peace in our time" tried to appease Germany.  Now many like yourself believe Trump should capitulate to China and have them continue their decades long practice of one sided trade where U.S. consumer buy their products and in effect  build their economy while they steal hundreds of  billions in intellectual property and put trade barriers to any USA product thereby hurting USA manufactures but again helping the Chinese.  The end game to that, is that the USA will in effect be providing the capital to make China the worlds largest economic power and rendering the USA impotent.  Free trade is fair trade where whatever impediments you place on imported products should likewise have reciprocal impediments to your exports.  

[Srikcir]

12 hours ago, Jingthing said:

He's surrounded himself with lackeys in his cabinet so forget Article 25.

A key to Article 25 is Vice President Pence (whom Trump just confirmed as his running mate in the 2020 election because of his loyalty) must make the determination of inability. https://www.thedailybeast.com/wanna-get-rid-of-trump-forget-the-25th-amendment 

Furthermore, to reach a determination requires the majority support of the Cabinet secretaries. Three of the 21 Cabinet-level positions still have acting directors: Homeland Security, Labor and the Small Business Administration. While the UN Ambassador position has been filled, Trump downgraded the position so its no longer part of the Cabinet. https://www.washingtonpost.com/politics/2019/07/24/whos-charge-many-months-acting-cabinet-secretaries/?noredirect=or  So must there be a full Cabinet before a majority can be met?

Of course the POTUS can at any time fire any Senate confirmed Cabinet holder. If he thought there might be some wavering Cabinet member towards Article 25, he could start winnowing down the cabinet numbers.

Article 25 is not going to happen.