Tariffs threaten the economy and sink stocks

21 June, 2018, 18:10 | Author: Regina Lloyd
  • Scott Sinklier  Newscom

US President Donald Trump threatened to hit another $200-billion of Chinese goods with an extra 10-percent tariff after Beijing retaliated.

Trump said he would impose a 10 per cent tariff on $200 billion of Chinese goods, following levies on $50 billion worth of Chinese imports enacted last week.

On Tuesday, U.S. President Donald Trump expanded his plan to impose tariffs on Chinese goods, increasing the stakes in an emerging trade war with Beijing.

Fears of a trade war that could harm global growth spurred sales of the Chinese yuan, which fell to a five-month trough in the offshore market, as well as commodity-linked and emerging market currencies. With concerns growing on Wall Street, the Dow Jones industrial average closed down almost 300 points - more than 1 percent - on its sixth straight losing day. Virtually all economists agree that restricting trade has damaging economic consequences for all countries that employ such policies, but the scale and the scope of the losses are potentially huge, not just for the USA and China, but also for countries not directly involved.

Despite mounting criticisms surrounding its trade conflict with China. the U.S.is not budging. Construction equipment maker Caterpillar closely followed and was down 3.3 percent.

"Such a practice of extreme pressure and blackmailing deviates from the consensus reached by both sides on multiple occasions", the ministry said.

If the tariff hike goes ahead, "China will have to adopt comprehensive measures that combine quantity and quality", the statement said.

The standoff could escalate further yet: Trump threatened tariffs on another $200 billion in Chinese products if Beijing lashes back again. China responded in kind by announcing tariffs on American imports. Earlier this month, that measure was extended to some of the US' traditional allies - the EU, Canada and Mexico. For example, if China were to single out Apple, the trade war could interfere with foreign production, bringing about supply issues, or it could cause the loss of Chinese customers, limiting demand. If the President is concerned about treating American footwear companies and consumers fairly, then he should have signed the TPP to lower footwear costs in America.




He says Canada imposes such onerous tariffs on USA products - shoes, for instance - that people are forced to "scuff 'em up" in order to "smuggle" them home.

The United States and China have the world's biggest trading relationship but official ties are increasingly strained over complaints Beijing's technology development tactics hurt American companies.

Analysis of how the tariffs impact vary and much depends on the final details of the duties that are pushed through.

In the first round of penalties announced by both nations, to take effect July 6, the US plans to impose tariffs of 25 percent on $34 billion of Chinese imports, such as construction machinery, aerospace and power generation equipment.

The move quickly drew praise from former Trump senior adviser Steve Bannon, who said: "President Trump told China and the world tonight that America will not back down when it comes to economic aggression".

The White House has asserted the United States has the whip hand in a tariff fight between the world's largest economies - with a senior economic adviser saying "it's clear China has much more to lose" and the president himself declaring that "trade wars are easy to win" - but economists widely disagree. Nor does the USA tax shoes imported from Canada.

Trump has persistently slammed Chinese trade practices, calling them unfair. Former economic adviser Gary Cohn, who left the White House as Trump continued ramping up protectionist policies, recently told the Washington Post that a trade fight could wipe out any economic gains from the Republican tax law passed previous year. But the rhetoric is intensifying after several rounds of high-level trade talks that White House economic adviser Peter Navarro said yielded no progress.

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