Europe rejects alliance with China to fight Trump on trade

Andrew Cummings
July 11, 2018

President Donald Trump's trade war with China kicked off on Friday, when the United States started applying 25 percent in tariffs on $35 billion worth of Chinese imports and China fired back with taxes on the same amount of US goods.

German Chancellor Angela Merkel and Chinese Prime Minister Li Keqiang are holding talks on closer economic cooperation in Berlin on Monday as the two countries seek a coordinated strategy in response to the U.S. administration's protectionist agenda.

The root of the problem for Trump with Canada and Mexico stems from the North American Free Trade Agreement (Nafta), signed in 1994, which the president has called a "disaster" and "one of the worst deals anybody in history has ever entered into". (NYSE: F) said on Thursday it has no plans now to hike retail prices of its imported Ford and Lincoln models in China, despite the steep additional tariffs on imported USA vehicles set to come into play on Friday. Some have responded by hiking their own tariffs on US goods.

Beijing immediately reacted to the measure by slapping higher tariffs on predominantly agricultural products from the US in a bid to harm US President Donald Trump's voters in rural areas. According to The Hill, Slater said, "These tariffs target the vital parts and components used in equipment manufacturing throughout the U.S. They also will drive up the cost of manufacturing in the U.S. and risk numerous 1.3 million good-paying manufacturing jobs our industry supports".

China's commerce ministry called the U.S. actions "a violation of world trade rules" and said that it had "initiated the largest-scale trade war in economic history".

Despite dire warnings about the impact on the U.S., Trump believes the robust American economy can outlast its rivals in the current battle. "Simply put, the USA is opening fire on the whole world, and also firing at itself", China commerce ministry spokesman Gao Feng said on Thursday.

President Donald Trump on Monday warned the WTO that if the USA isn't treated "properly, we will be doing something". At the time he announced the tariffs, back in mid-June, Trump said the current U.S.

Le Drian said such policies have victims, "but the victims tomorrow will be the Americans themselves".

U.S. President Donald Trump has warned that the United States may ultimately target over $500 billion worth of Chinese goods, an amount that roughly matches its total imports from China previous year.

Peter Navarro, the White House trade adviser, has said the United States needs to protect its high-tech "crown jewels" from predatory Chinese practices.

The US tariffs of 25 per cent, on products linked to China's high-tech industries, are set to take effect today at 12.01am Eastern Time, or 12.01pm in Singapore.

So you don't think these US tariffs and Chinese counter tariffs today are here to stay?

The impact is already being felt in the markets.

The Nikkei 225 fell 0.8 per cent, and stocks in Thailand and the Philippines slumped 1.5 per cent. Stocks in Singapore, Indonesia and Malaysia finished slightly stronger.

Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that would be subject to new US tariffs, with USA firms accounting for a significant part of that 59 percent, Gao said.

As the world's most developed nation and the rule-maker of the current global governing system, there is "astounding absurdity" in the USA complaining that it's been bullied in trade, the People's Daily, the flagship newspaper of the Communist Party of China, said in a Chinese language commentary on Friday.

The Shanghai Composite Index .SSEC ended up 0.5 percent after flirting with two-year lows in the morning session. "China is forced to strike back to safeguard core national interests and the interests of its people", its commerce ministry declared.

The list avoids direct tariffs on consumer goods such as cellphones and footwear.

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