undergroundnewsroom.com April 26, 2018

Trump orders huge tariffs on China, raises trade war worries

25 March 2018, 12:45 | Jenny Fowler

Trump orders huge tariffs on China, raises trade war worries

China might hike tariffs on US pork and other goods

After President Donald Trump announced plans to impose tariffs on products including Chinese steel, Beijing responded Friday with a threat to slap an equal 25 percent charge on USA products such as pork, and a 15 percent tariff on such things as wine, apples, ethanol and stainless-steel pipe.

"We urge the United States to cease and desist, make cautious decisions, and avoid placing China-U.S. trade relations in danger with the goal of hurting others that eventually end up hurting itself", it added. Lighthizer told United States lawmakers on Thursday that the European Union, along with Argentina, Australia, Brazil and South Korea, would also be exempted.

The President announced plans to impose tariffs on $50bn in Chinese goods as well as limiting the country's investment in the US.

The fact that China responded with tariffs of only 3 billion dollars on USA goods is testament to his policy.

Trump's steel and aluminum tariffs, which are tied to Section 232 of the 1962 Trade Expansion Act, go into effect on Friday. Then he announced the steel and aluminum tariffs, saying reliance on imported metals jeopardizes USA national security.

The Trump administration's move to impose tariffs on countries like China undermines the rules-based system of global commerce that the United States itself helped create after World War II, experts and trading partners say.

In announcing exemptions for the European Union, Argentina, Australia, South Korea and Brazil, the Trump administration has effectively narrowed the countries that it is targeting with its protectionist trade policies. "We are confident in our capability to face up to any challenge", the Commerce Ministry said.

US businesses seem happy that there's a pause, albeit brief, for them to weigh in.

Michael Pillsbury, director of the Center for Chinese Strategy at the Hudson Institute in Washington, said Xi had turned to respected veterans of diplomacy with the United States by elevating Liu, who studied at Seton Hall and Harvard, and Wang Qishan, the new vice president, who has long-standing ties with Wall Street.

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"We have a tremendous intellectual property theft situation going on", Trump said as he signed the new trade order, which could include duties as high as 25 percent. He told reporters, "This is the first of many".

Not everyone believes the two nations are headed inexorably for a trade war. "Even so, it remains way short of his campaign pledges and-at a maximum-will shave a fraction of a percent off Chinese GDP over a number of years".

Citing the example of Europe, a potential target of the impending US tariffs and which has already announced it will respond by slapping import duties on a greater number of USA products, Kennedy believed that it could make the situation "infinitely complicated". After Trump's announcement, China's Commerce Ministry said it was proposing tariffs on 128 USA products including pork, wine and seamless steel tubes.

The measures included a significant change in Trump's looming steel and aluminium tariffs that would aim them primarily at China, the Washington Post reported.

The commerce ministry said China would implement the measures in two stages: first the 15 percent tariff on 120 products including steel pipes and wine worth $977 million, and later, the higher 25 percent tariff on $1.99 billion of pork and aluminum. "Moreover, 60% of USA hides and skins exports, which total $2 billion annually, are sent to China".

As a result, foreign investment, particularly from China, has become increasingly critical to financing US economic growth.

"It doesn't make sense to impose tariffs on US brand products that are made for American companies to make profits", said a senior official in Sichuan Province, where iPad production has fueled economic growth.

"From a macro perspective the additional tariff is only equivalent to 0.1 percent of China's GDP and affected exports only account for 2.2 percent of China's total exports", they wrote in a note.

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