South Korea airs worries over fallout from US-China trade war

Andrew Cummings
July 12, 2018

Lighthizer said the initial $50 billion in us tariffs were aimed at goods that "benefit from China's industrial policy and forced technology transfer practices".

The spiraling conflict stems from Washington's complaint that Beijing steals or pressures companies to hand over technology and concerns that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.

The tariffs could take effect after public consultations end on August 30, according to a statement from the U.S. Trade Representative's office Tuesday.

Last week, Washington imposed 25% tariffs on US$34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of U.S. exports to China.

China' s Ministry of Commerce said that the tariffs are "totally unacceptable" and it is hurting the entire world, as well as China.

China is shocked by what the United States did... the Chinese government will, as always, be forced to take necessary countermeasures.

"This is a fight between unilateralism and multilateralism, protectionism and free trade, might and rules", foreign ministry spokeswoman Hua Chunying told a regular briefing on Wednesday.

As the threats in the trade dispute have increased, so too have signals from Beijing that it means to follow through on reforms.

The U.S. government said the new tariffs are in response to Beijing's June 15 tariffs on $50 billion in U.S. exports, which were themselves in retaliation for President Trump's initial tariffs against China. The threat to the USA economy is less about a question of "if" and more about "when" and 'how bad.' Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise.

Last year, more USA crude oil was sent to China than any other destination except Canada, the EIA said in an analysis on Tuesday.

It also approved a huge new wholly-owned Shanghai factory for US electric auto maker Tesla Inc, and a $2.3-billion joint venture organic light-emitting diode (OLED) plant to be built by South Korea's LG Display Co Ltd. Chinese tariffs have already impacted USA exports such as soybeans.

U.S. President Donald Trump and first lady Melania arrive on Air Force One at Beijing, China, November 8, 2017.

On the other hand, if the Chinese bought up more Treasuries, they could make the US dollar even more expensive, and widen the trade deficit further.

The tariffs on an additional US$200 billion in Chinese goods won't go into effect for another several months, so China has time to load their non-tariff weapons.

That prompted fears it might go beyond matching Washington's duty increases by disrupting operations for USA companies in China. Regulators can deny or cancel licenses or tie up companies by launching tax, environmental or anti-monopoly investigations.

And Beijing is still holding up at least one major takeover involving foreign companies - US chipmaker Qualcomm Inc's deal to buy Netherlands-based NXP Semiconductors NV.

For Qualcomm, an acquisition deal that was reportedly approved by Chinese authorities earlier this year might be in jeopardy, as Bloomberg noted today.

China could also limit visits to the United States by Chinese tourists, a business state media said is worth US$115 billion, or shed some of its US Treasury holdings, Iris Pang, Greater China economist at ING in Hong Kong, wrote in a note.

Members of Congress are increasingly questioning Trump's tactics.

Members of Congress are increasingly questioning Trump's aggressive trade policies, warning that tariffs on imports raise prices for consumers and expose USA farmers and manufacturers to retaliation overseas.

"Trade is critical to economic growth and supports millions of jobs from Silicon Valley to the savannahs of the heartland", Dean Garfield, chief executive of the Information Technology Industry Council, says in a statement.

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