Published: Wed, August 08, 2018
Money | By Hannah Jacobs

China ready to levy new duties if United States escalates trade war

China ready to levy new duties if United States escalates trade war

But economists now worry that a continually widening trade deficit - which will be exacerbated if Trump keeps upping tariffs - will slow the USA economy in the second half of the year, reports The Wall Street Journal. "China is not delivering, OK?"

Despite the escalating trade row, the economy's resilience has been remarkable, said Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics.

"China has made it very clear it is going to boost infrastructure investment for the second half of the year", said ANZ's Wang.

President Trump speaks during a campaign rally July 31 at the Florida State Fairgrounds Expo Hall in Tampa.

In the meantime, signs of the trade war are creeping into the economic data. The government announced it has prepared a list of $60 billion worth of US goods to hit with duties should the USA follow through on a plan to impose duties on an additional $200 billion of Chinese goods, as early as next month.

Earlier this week, the USA said it was considering more than doubling to 25 per cent the tariffs for the US$200 billion in Chinese imports that are under public review. That covers more than two-thirds of the value of China's imports from the USA, but it excludes products such as big aeroplanes and some computer chips, which China struggles to produce domestically.

USA companies are putting in place measures to cushion the impact of the trade row, including price hikes, and a number of companies - from industrial firms to home furnishers and toymakers - have said they will move some sourcing and manufacturing outside of China.

Recall that President Hassan Rouhani of Iran had earlier warned the USA against any attempt to stop Tehran's oil trade. US business and farm groups, which do extensive business with China, have complained for months about Trump's strategy, but there are no signs that the Chinese government is paying for a campaign in the United States. "I noticed today that Japan's stock market is now worth more than China's - I love that", he told journalists at the White House. Trump, however, has effectively threatened to slap tariffs on all of China's shipments to the United States, the Asian giant's largest export market.

The new list includes products as varied as snow blowers and 3-D printers, suggesting Chinese authorities are struggling to find enough imports their own economy can do without. The country exported about $500bn in goods to the U.S. and imported about $130bn.

"Market participants foresee a relatively stable Chinese currency in the near term, without fear of impacts from the U.S". United States manufacturers are considering expanding outside the country to avoid the widening trade conflict, according to the Institute for Supply Management's July survey. Taken in totality, the new Chinese proposals will cover $60 billion in United States imports.

Hopes had been rising that Trump might drop his trade-war campaign after the president announced a deal last week with European Commission President Jean-Claude Juncker that would see the U.S. and EU cut tariffs and other barriers. Meanwhile, the measures are expected to lower the impact on the domestic production and people's lives as much as possible, it said.

Chinese authorities - bracing for economic fallout - have taken a range of measures in recent weeks to bolster the economy. US Trade Representative Robert Lighthizer last week called trade tensions a "chronic problem" that would likely take years to resolve. From Apple to General Motors, a long list of large US enterprises have transferred extensive operations to China and could be vulnerable to any response from Beijing.

But more worryingly, also included on China's latest list are 189 lines of clothing in both knitted and woven categories imported from the U.S., including shirts, trousers, blouses, T-shirts, sweatshirts, pullovers, sportswear, swimsuits, tights and hosiery, down jackets and overcoats.

A commentary on the front page stated that Trump's eagerness for others to play along with his drama is "wishful thinking", pointing out that the United States had worsened the trade spat with China into a "zero-sum game".

Warren-based steel fabricator Ohio Star Forge, which forges steel components used primarily in the auto industry, is unsure whether the retaliatory tariffs announced Friday will directly affect the company, but it is concerned about the trade war overall.

Answering a reporter's question about what was specifically said on trade, Wang said: "We did not speak in such details".

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