Love The Position We're In: Trump On China Amid Trade Dispute

Andrew Cummings
May 14, 2019

Therefore, China should not retaliate-will only get worse!

US stock prices plunged on the news.

Chinese stocks closed weaker on Tuesday due to the escalating Sino-U.S. trade war, though prices recovered from early lows on suspected state-backed buying and comments from U.S. President Donald Trump that raised hopes of a deal between the two sides. Just $5 a month. Trump tweeted that Beijing "had a great deal, nearly completed, & you backed out!"

US President Donald Trump has escalated a fight with China over technology and other trade disputes. "The only problem is that they know I am going to win (best economy & employment numbers in US history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term".

"Such an easy way to avoid Tariffs?"

US tariffs a year ago triggered retaliation by China, which imposed 25% levies on $50 billion worth of USA products including soybeans, beef and pork and lower tariffs on a list of $60 billion in goods.

The remaining foods now caught up in the latest round of tariff escalation, to go into effect June 1, are exported to China to a much smaller degree.

US trade with China hit record levels previous year, with US$540 billion in imports and US$120 billion in exports, according to the US Commerce Department. Its state media kept up a steady drum beat of strongly worded commentary, reiterating that the door to talks was always open but vowing that China would defend its national interests and dignity.

"I love the position we're in", Mr. Trump told reporters at the White House just before meeting with Hungarian Prime Minister Viktor Orban.

Robert Lighthizer, the U.S. trade representative (left), and Steven Mnuchin, U.S. treasury secretary, wait to greet Liu He, China's vice premier, outside the Office of the U.S. Trade Representative in Washington, D.C., U.S., May 9, 2019.

Trump has said that US consumers will not shoulder the burden of tariffs, though experts say the increases are likely to affect consumers in both countries.

One of Trump's former economic advisers was reportedly so concerned at the President's nonsensical trade policy that he stole papers off his desk to prevent him from signing them. In Asia, the Shanghai Composite index fell 1.2per cent. Japan's Nikkei 225 index gave up 0.7 per cent and South Korea's Kospi fell 1.4 per cent. He emphasized the talks' ongoing nature and discouraged the term "trade war", saying the tariffs were simply part of the negotiations.

Asian bonds could also suffer the fallout, with riskier debt, including that of Indonesia's, potentially in the firing line, according to Vanguard Asset Management.

These risks include "property bubbles, excessive leveraging, and rising income inequalities", Raymond Yeung, the Australian bank's chief economist for greater China, said in a May 10 report.

The prospect that the United States and China were spiralling into a no-holds-barred dispute that could derail the global economy has rattled investors and led to a sharp selloff on equities markets in the past week.

A further point to consider is that while China is cutting both subsidies and taxation, Trump has pledged to increase subsidies to the US farmers whose businesses have been harmed by his anti-China trade war. "Ultimately it's paid for largely by China".

A gauge of global stocks shed a further 1.9% on Monday, its biggest one-day drop in more than five months.

The rising trade hostilities could damage the economies of both countries. The U.S. increases apply to Chinese goods shipped since Friday, and those shipments will take about three weeks to arrive at U.S. seaports and become subject to the higher charges.

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