Wednesday, 25 April, 2018

Markets hit as China counters USA move

The Trump administration decided to impose strict tariffs that would target China. But it was decided late Thursday night that the tariffs would be temporarily postponed on some of the nation's close allies Trade war: Extent of US-China trade fight depends on Trump's goals
June Sullivan | 25 March, 2018, 00:46

Speaking from China, Trade expert Stephen Jacobi says New Zealand businesses shouldn't panic just yet.

A senior USA official has said that the European Union (EU) and six other countries will be exempt from steel and aluminium tariffs announced by President Trump, at least temporarily.

USA diplomats, business leaders and many experts, though, blame China for consistently failing to address long-standing demands to open its markets further.

The levies, which go into effect on Friday, will largely hit China.

Washington doesn't believe it needs to give Chinese leaders another list of requests because they already know what the United States wants, said a senior US official, who briefed reporters on condition he not be identified further.

"They also jeopardize global trade order and world economic stability", it said.

"So for every one American worker who will be pleased at Mr. Trump's announcement of tariffs, there will be ten American workers whose own products in his or her factory will be affected by the cost of the tariff", the scholar added.

China has assembled a list of 128 US products in total that could be targeted if the two countries are unable to reach an agreement on trade issues, the ministry said.

"China can sustain pain much longer than the US can, and it has the ability to harass numerous American companies operating in China".

In a statement, China's commerce ministry said: "China will not sit idly by and let its legitimate rights and interests be harmed, and will certainly take all necessary measures to resolutely defend its legitimate rights and interests".

In a second phase, a 25 percent duty would be imposed on a eight goods totalling almost $2 billion, including pork and aluminium scrap, after "further evaluating the impact of the United States measures on China", it said in a statement.

Following his surprise victory in November 2016, investors make a beeline for the market in what became known as the "Trumpflation" trade - a bet that the former real estate mogul's administration would deliver a boost to the US economy through increased fiscal spending, deregulation and tax cuts. The WTO allows a country to set up tariffs for that reason, but it is something of a taboo among countries to do so because if one country invokes national security, it increases the chance that others might as well. The U.S. reported a $375 billion deficit with China past year, which Trump has blamed for the loss of American jobs and closing of plants.

"China does not want a trade war with anyone", the Chinese embassy in Washington DC said in a statement Thursday. Next came steel and aluminum tariffs, prompting an outcry from trading partners and criticism that those tariffs will have only a small impact on China. "We feel that focusing on reciprocal treatment while maintaining strong communications between the governments will be the best path forward to get to our goal of a level playing field based on fairness".

He exempted some countries pending negotiations and gave the immediate green light for others, like China. -China Business Council, which represents American companies that do business with China.

"Maybe he wanted it this way, but Xi missed every opportunity to negotiate good-faith solutions to trade and investment disputes".

But many of its companies appear to have missed that memo.

For some in China, that sends a worrying message.

The Confucius Institute headquarters in Beijing did not respond to a request for comment.

The other problem that has long irked the president is the significant trade deficit. "There are many political factors behind this, such as the fight for [global] leadership and the conflict over ideologies".

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