China says threats, intimidation on trade will never work

Ann Santiago
July 25, 2018

Analysts at JPMorgan said these moves, together with a lower greenback and better commodity prices, should be positive for Asian equities.

In the latest trade salvo, Trump said he was ready to impose tariffs on all $500 billion of imported goods from China.

USA officials recently issued a list of a range of Chinese imports Trump wants to impose new tariffs on including many food products as well as tobacco, coal, and chemicals.

Statistics showed that in the first six months of the year, China's exports to the U.S. rose 13.6 percent from a year earlier, while imports from the USA increased by 11.8 percent.

In May, the White House issued a statement saying that the United States will impose a 25-percent tariff on Dollars 50 billion of goods imported from China, which contain industrially significant technology.

"Trade tensions are likely to remain in the headlines as Juncker meets President Trump in Washington to discuss potential US tariffs on European autos", asset manager Insight Investment, which is owned by BNY Mellon, said in a note. Higher auto prices for American consumers would inevitably follow.

In a series of comments late last week that shook financial markets, President Donald Trump attacked the Federal Reserve for raising interest rates and for undercutting his efforts to slash the USA trade deficit.

Trump on Friday lamented the recent strength of the dollar, and accused the European Union and China of manipulating their currencies.

The dollar index is so far up 2.4 percent this year. "So in order to keep inflation in check they may need to hike interest rates". But rate increases also make borrowing costlier for households and companies and can weaken growth.

The US leader is already embroiled in a messy trade dispute with China and Europe, while negotiations with Canada and Mexico to revamp the North American Free Trade Agreement have stalled. "He's been saying since the '80s that trade deals are bad and we should have more tariffs, and that's what we're getting". China promptly levied taxes on the same value of USA products. It expects that 700,000 jobs would be lost. -China trade war and the other conflicts Trump has ignited.

Wall Street and European stock markets stalled, despite good corporate earnings, after Trump threatened to impose tariffs on all US imports from China.

But many analysts are skeptical that Trump's tactics will produce such an outcome.

Traders said growing expectations of an easing in monetary policy piled pressure on the Chinese yuan.

China will likely retaliate if additional tariffs are imposed, economists note, rather than simply knuckle under. "The Fed will keep tightening and the worsening deficits will keep Treasury supply increasing", which will keep USA yields attractive to global investors, supporting the greenback.

Philip Levy, a trade expert at the Chicago Council on Global Affairs and a former White House trade adviser, suggested that Chinese officials have been frustrated and confused by their previous failed efforts to reach an agreement.

"China has no intention to use means like the competitive devaluation of its currency to stimulate exports", he said.

"Currency is now part of the trade war folks", said Greg McKenna, Chief Market Strategist at AxiTrader. "They've received conflicting messages depending on who they speak with". Yet any such agreement would require extensive talks over how it would be implemented and verified.

In the CNBC interview broadcast Friday, Trump reiterated his claim that the United States is "being taken advantage of" on issues including trade policy.

"I'm not thrilled", he said.

"We're stopping the barriers to other countries".

Other reports by

Discuss This Article