China Trade War Starts

Cheryl Sanders
July 11, 2018

Chinese shares, which have been battered in the run-up to the tariff deadline, slipped further from early deals and pulled Asian markets down, while the yuan currency also weakened.

"I put millions of dollars into equipment and infrastructure on the basis of exporting a heck of a lot more to China". He said that it has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.

It forced US firms to hand over their technology if they wanted to operate in China.

That will take some sting out of the tariffs, of course, but when you need to buy a new thermostat or sedan you need to buy one and if your product isn't exempted, you're out of luck.

But despite the rhetoric, today's tariffs could be the opening skirmishes in the war, as Trump has vowed to impose duties on as much as US$450 billion (RM1.8 trillion) in Chinese goods, the vast majority of imports. The president said US tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.

Asia is bracing for the opening salvo in a tit-for-tat trade battle, with the USA due to impose 25% tariffs on $34bn of Chinese goods on Friday. Last Thursday, Trump said he planned to roll out an additional tariff on $16B of Chinese goods "within the month", and China doesn't appear to be backing down any time soon, either. It could also result in other countries raising protectionist barriers. So, it's doing two big things.

Dennis Riggs, 63, who farms south of Sidney, said numerous investments he has been wanting to make on his farm are now "out of the question", because China launched its own set of tariffs on American goods like soybeans, corn, pork and poultry in retaliation.

Retaliatory measures "took effect immediately", said a Chinese foreign ministry spokesman, Lu Kang. That's no accident. China wants to be seen as a counterpuncher, rather than the aggressor in this dispute.

"The earnings season has the potential to draw more money into the market", said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

He told CNBC that there may be no way to escape a trade war with China.

"We're now looking at a 25 percent tariff on every single soybean that we try to sell to China", said Kirk Merritt, OSA executive director.

Products that the United States is now fighting trade disputes over include Argentinian textiles, India solar panels and European cheese.

China's exports to the United States increased by 5.4 percent in the first half, 13.9 percentage points slower than the same period a year ago, customs data showed.

U.S. equities edged higher in morning trade after monthly jobs data showing a 213,000 gain in non-farm payrolls in June and stable wage growth.

The negotiations began in August but have stalled over US demands created to discourage investment in Mexico and to shift auto production back to the United States. His Administration's actions responded to injurious trade practices by China and other countries, including attempts to avoid legally imposed anti-dumping and countervailing duties.

Trump has railed against Beijing for intellectual property theft and barriers to entry for USA businesses and a $375 billion US trade deficit with China.

And so they formed the Trans-Pacific Partnership. Beijing is pushing for its China Made 2025 project, the strategy for which involves stealing as much intellectual property as possible, including in telecom and defense industries. There was a possibility too that this war could drag on longer than expected, beyond the November mid-term elections in the United States, not least because the tension is no longer restricted to trade, said OCBC economist Tommy Xie.

One of Trump's first acts in office, however, was to withdraw us from this pact.

The dispute could be hard to resolve.

The Europeans have so far reportedly rejected Chinese overtures.

China is expected to match the move with a 25% levy on United States goods to the same value on the same day.

The fight could also affect other parts of China-US relations.

Signs of nervousness about the trade outlook were evident elsewhere in global markets with the Japanese yen and the Swiss franc firm against the dollar while core United States and German bonds were in demand.

Other reports by iNewsToday