Trump Drops the Fig Leaf on Trade

Ann Santiago
Мая 11, 2019

The United States will impose an increase on tariffs on 200 billion us dollars in Chinese products after a round of negotiations in Washington ahead of a midnight deadline failed to break an impasse.

A White House spokesman said U.S. officials had agreed with the vice-premier to resume talks on Friday morning, according to media reports. Uncertainty around the negotiations trickled down to Wall Street, where the major indexes fluctuated throughout the morning and early afternoon. Washington has confirmed the trade talks will continue despite the flare-up in the trade war. However, Liu said hiking tariffs is not a solution to the problem.

Chinese Vice Premier Liu He huddled with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington on Thursday for about 90 minutes of talks before breaking and reconvening later for a working dinner.

Just hours earlier, Washington had pulled the trigger on an increase in punitive duties on $200bn in Chinese imports to 25% from 10%, and Beijing responded vowing to take the "necessary countermeasures".

USA stock futures fell and Asian shares pared gains after the U.S. tariff hike.

That has increased pressure on President Xi Jinping, who political analysts say faces criticism within the ruling party that he has failed to manage Trump.

The biggest Chinese sector affected by the latest tariff hike is a $20bn-plus category of internet modems, routers and other data transmission devices, followed by about $12bn worth of printed circuit boards used in a vast array of US -made products.

Bank of America warned clients of a "global recessionary scenario" if a full trade war erupts as tensions between China and the USA escalated over the implementation of new tariffs. The proposed tariffs on the reminder of Chinese imports - the $200 billion worth of goods - would no doubt affect consumers. "These massive payments go directly to the Treasury of the U.S". In the past, Beijing has responded immediately to new tariffs imposed by the USA on Chinese goods.

Talks will continue in Washington on Friday.

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Chinese stock markets rose on Friday, with the Hang Seng index up 1% and the Shanghai Composite almost 2% higher.

Gary Shapiro, chief executive of the Consumer Technology Association said the tariffs would be paid by American consumers and businesses, not China, as Trump has claimed.

"While we are disappointed that the stakes have been raised, we nevertheless support the ongoing effort by both sides to reach agreement on a strong, enforceable deal that resolves the fundamental, structural issues our members have long faced in China".

Trump tweeted that if the USA bought $15 billion in agriculture from farmers it would be far more than China buys now.

The biggest Chinese import sector affected by the rate hike is a $20 billion-plus category of internet modems, routers and other data transmission devices, followed by about $12 billion worth of printed circuit boards used in a vast array of US- made products.

At the same time, he said that it is possible that the United States and China will enter into a trade deal. Bloomberg Economics calculates the new increase will raise the drag on Chinese growth to 0.9 percentage point from 0.5 percentage point.

While American companies complain of lost export markets, disrupted supply chains and higher costs, the United States continues to see steady growth and falling unemployment.

The higher import taxes won't hit goods that already left Chinese ports before Friday's deadline.

"We can't allow China to rape our country, and that's what they're doing", he stated.

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