Donald Trump readies $200 billion in China tariffs, citing 'unacceptable' policies

Andrew Cummings
June 19, 2018

Shanghai stocks tumbled almost 4 per cent on Tuesday to a two-year low as US President Donald Trump's fresh tariff threats against China raised the spectre of a full-blown trade war.

Currency markets in general dislike trade intervention, and previous protectionist efforts by the United States government have weakened the dollar. It said with retaliatory tariffs imposed by American trading partners added in, the total rises to $181 billion, or 1 percent of global trade.

"This is a global trade war, plain and simple, and the American families will be the ones who suffer most", added Hun Quach, vice president of worldwide trade for the Retail Industry Leaders Association. By most accounts, Beijing has made a routine practice of stealing American intellectual property - as part of its broader "Made in China 2025" project, which aims to position China as a dominant force in the high-tech industries of the future. "At the president's direction, USTR is preparing the proposed tariffs to offset China's action".

According to the report, Trump's administration has explicitly told Cook that it will not place tariffs on Chinese-assembled iPhones - a major guarantee for the company - but Apple is concerned about potential actions by China's government. "These negative repercussions span a broad spectrum, extending from the risk of domestic political backlash, to the risk of decreased Chinese cooperation on North Korea, to the outside possibility that China will move to test USA mettle with regional security alliances". Shanghai stocks plunged to two-year lows. The S&P 500 and Nasdaq each dipped by almost one percent. But it appears that Trump and Kudlow were more interested in Cook's promise that Apple will contribute $350 billion to the USA economy over the next five years.

S&P 500 Index futures declined after Trump said he has directed the U.S. Trade Representative to identify US$200 billion worth of China goods for additional tariffs.

In Beijing, China's Commerce Ministry responded swiftly to Trump's latest threat, warning that if the U.S. imposed fresh tariffs, China would have to adopt "comprehensive measures combining quantity and quality to make a strong countermeasure".

"The trade relationship between the United States and China must be much more equitable", Mr. Trump said.

Trump's latest comments came hours after US Secretary of State Mike Pompeo accused China of engaging in "predatory economics".

A paper published by Canadian think tank the CD Howe Institute suggests that Mr Trump's threats are having an effect on U.S. manufacturing by using "uncertainty as a new weapon in trade protection".

If Trump carries through on all his trade threats, the result would be higher costs on virtually all the goods that the US imports from China. ZTE shares were down 10 percent at 11:30 a.m. ET. He said the US would impose tariffs on another $200 billion after that if Beijing retaliates.

"China will run out of ammunition sooner than the U.S.", he wrote in a note published on Tuesday.

That's not to say that China is blameless.

Some of the US's biggest exporters were among those most affected. Chinese stocks recorded their steepest falls since the trade dispute started on Tuesday.

This comes after the US slapped 25 percent duties on $50 billion worth of Chinese imports.

China, claiming the United States had "launched a trade war", retaliated nearly immediately, outlining its own tariffs on U.S. goods worth $50 billion.

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