Trump & China Trade War

Fears that Donald Trump is embroiling America in a global trade war intensified on Wednesday after China imposed tit-for-tat import taxes on the US and stock markets plunged.

The Dow Jones industrial average dropped and then rallied after markets fell in Europe and Asia on worries of an intensifying trade conflict between the world’s two biggest economies – the latest example of Trump taking his appetite for disruption to the global stage.

After Washington unveiled plans to impose tariffs on $50bn in Chinese imports Tuesday, China hit back with plans to tax a matching $50bn of US products, including beef, cars, planes, soybeans and whiskey.

The US president has worn stock market success as a badge of honour and proof that, despite myriad controversies, the economy is booming under his presidency. But there are concerns that his aggressive tariffs and “America first” instincts could undermine confidence and cause a slowdown.

Trump claimed last month that “trade wars are good, and easy to win”.

China is the biggest market for US soy. The American Soybean Association, a lobbying group representing 21,000 producers, warned that China’s proposed 25% tariff on soybeans would be “devastating” to American farmers. It estimated that farmers lost an estimated $1.72bn on Wednesday morning alone as soybean futures tumbled.

John Heisdorffer, an Iowa farmer and the president of the association, said: “That’s real money lost for farmers, and it is entirely preventable.” He called on the White House to scrap its proposed tariffs. The car makers Ford and General Motors also issued statements calling for continued dialogue to resolve the escalating trade tensions.

On Wednesday, Trump moved to play down concerns over a damaging trade war. He protested on Twitter: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”

The president added: “When you’re already $500 Billion DOWN, you can’t lose!”

The US commerce secretary, Wilbur Ross, also urged calm. In an interview with CNBC, Ross said the tariffs announced by China amounted to a mere 0.3% of America’s gross domestic product. “So it’s hardly a life-threatening activity,” he said.

Ross added that some US punitive action against Beijing has been “coming for a while” over China’s predatory behaviour involving technology. “What we’re talking about on both sides is a fraction of 1% of both economies,” Ross said.

The tariffs will not take effect immediately. The US government is inviting public comment on its trade sanctions through 11 May and will hold a hearing on the plan on 15 May. China set no date for its 25% duties to take effect, saying it was waiting to see what Trump did.

https://www.theguardian.com/business/2018/apr/04/trump-china-trade-war-concerns-import-taxes-stock-market

I do wonder... won’t China lose more if Apple and other companies pull their productions home toUS.

Anyway I hope this doesn’t escalate

Intentionally or unintentionally, China seems to be targeting areas and demographics that tend to be Trump supporters.

Smart.

The way to figure out Trumps motivation on this trade war is simply to ask oneself 'what would Russia want us to do'

so trade wars are easy to win and we're not in a trade war because we've already lost?

I believe the EU prepared a similar hit list that included stuff like Harley Davidsons.

This will be interesting to see how it plays out.

man the Post gets trump so butthurt

https://www.cnbc.com/2018/04/04/uneasiness-spreads-in-farm-economy-with-china-targeting-us-soybeans.html

The U.S. exports about $14 billion worth of soybeans to China, according to the U.S. Department of Agriculture. China buys roughly half of the U.S. soybean exports, and roughly one in three rows of soybeans grown on the nation's farms goes to the world's second-largest economy, according to the American Soybean Association.

China's planned tariffs on U.S. agriculture come as the nation's heartland already is struggling after years of low crop prices. Some farmers are considering exiting the business. In February, the USDA predicted net farm income in 2018 would fall to lowest level in nominal terms since 2006.

The lion's share of the U.S. agribusiness trade to China involves soybeans, which are grown in many Midwestern farm states where President Donald Trump received strong support during the 2016 presidential election.

No one wins trade wars. Both sides lose tons of jobs, tons of money, and other countries are usually affected as well. It's a completely no-win situation. That being said, I don't think tech companies are going to start producing in the U.S. just because China hit the U.S. with tariffs. They produce in China because labor costs are low, tariffs don't change that.

There are some processes that are easier to automatize than others. Of course if you need some metals that almost only China mines, you're almost bound to be processing it further in China as well.

I mean, even then I don't see any incentive for Apple to manufacture in the U.S. Corporations are post-national, they don't care where they operate as long as it makes the most business sense. Let's say that everything else was equal, the U.S. and China were equally able to handle Apple's operating costs, and Apple just decides that it prefers the U.S. Even then there are costs to opening up new factories, closing down old ones, re-locating operations, setting up new supply lines, etc. I think that if the U.S. wants to re-establish itself in manufacturing it needs to either manufacture something that isn't common elsewhere or do something really innovative to the manufacturing process itself. Constantly chasing businesses trying to get them to relocate isn't a successful strategy, imo.

Well this isn't going away anytime soon. I have a feeling that China doesn't care as much as the US when it comes inflicting harm on it's citizens or consumers when it comes to proving a point.

It's OK guys, these things are easy to win. Those farmers in the Midwest? Well, all wars have casualties.

Targeting Trump voters? They couldn't be that smart could they?

If Trump want's another Great Depression, this is a sure-fire way to pursue it.

Considering that 99% of the products comes from China, yes

So Trump only has to hit them where it hurts and put major taxes on electronics.

But even EU agrees that something needs to be done about China, Trump is just the only one who has taken any steps.

If China produces 99% of your electronic products, and Trump puts taxes on them then surely the US consumer will just end up paying more right?

I agree though that something should be done about Chinese intellectual property theft.

@Jacanuk: Well.. It could perhaps be fairer to simply match their import tax?

Looking at it differently though, China has no problem bleeding money for something if it means gaining control of a resource.

Yes that is what will happen. China will still make money. Americans will lose money. Isn't his plan going to make America great again. smh

Sure, but we can afford it.

China can´t afford to lose out on production

@Jacanuk: I should have explained my second point better. It relates to mining rare metals and such. For it to work, the government would need to own the mining companies and fund them with tax payer money. Beat China at their own game, more or less. But this is a side track to OP so I won’t go any further with it.

@Jacanuk: How sure of this are you?

@Jacanuk: China controls their media, their banking system, and has a one-party political system with a president with no term limits. They can spin the story however they want and force their banks to extend low/no interest loans to temporarily prop up struggling industries.

Trump on the other hand is an already unpopular President and with a failing economy would become even more unpopular. He’s up for re-election in 3 years and the congress that protects him against possible impeachment is up for re-election in 6 months.

I’d bet on China and so would any sensible person.

I wouldn't bet on either. Neither side is going to win this. It's a loss for everyone involved. China exports far more to us than we do to them, but they have other avenues to hit Trump - specifically in penalizing US companies in China, stopping chinese tourism and business to the US, etc.

This is a bad move and Trump would be extremely stupid. While I agree China needs to tamed, this is not the way to do it. It's like a big baby.

Not saying you are wrong but it’s worth considering the only thing that gives the Chinese regime legitimacy to the people is economic prosperity. Without it, they have nothing and are prone to revolts from inside the party and outside of it. The CPC has staked their entire existence on bringing wealth to the people of China in exchange that the people will let the Party rule however they like provided that wealth comes.

A trade war isn’t good for the regime’s existence maybe more so than it is for Trump. I’m sure Trump has advisors that know this.

@perfect_blue: I’m not sure what’s less improbable about your statement, your impression that Trump has qualified advisors or that you believe Trump would actually listen to them.

@Baconstrip78: I reckon the latter is more improbable. Trump’s advisors now are all anti-China hawks.

Brazil and Australia have lots of iron so China isn't the only country with large deposits.

It was flooding the market with cheap steel in order to corner it by undercutting everyone else.

I agree with @theone86 that advanced manufacturing would make the US more competitive. The UK still compete is some high-tech manufacturing but the major industries were sold off under Thatcher and now we are a service economy and as such much less stable as a result.

Anyone remember ICI? Well they used to be bigger than BASF. Just sold it. **** Thatcher man. :|

@perfect_blue:

https://www.export.gov/article?id=Argentina-trade-barriers

Tariff Barriers

For countries outside the MERCOSUR area, Argentina and its MERCOSUR partners established the MERCOSUR common external tariff (CET) on January 1, 1995. The CET currently ranges from zero to 20 percent for most products. However, some products in the automotive sector can reach 35 percent.

---

https://www.nytimes.com/2017/03/20/business/economy/china-us-trade-tariffs.html

From March 2017, China has higher trade tariffs on US built cars before Trump's response.

https://twitter.com/elonmusk/status/971811614411276288

From Musk's March 8th, 2018, China already has 25 percent import duty on US made cars before Trump's response.

----

https://www.reuters.com/article/us-eu-steel-china/eu-raises-import-duties-on-chinese-steel-angering-beijing-idUSKBN1780VU

EU already raises import duties on Chinese steel in 2017.

https://www.zerohedge.com/news/2018-03-06/europe-renews-tariffs-chinese-steel-pipes-high-72

European Union Renews Tariffs On Chinese Steel Pipes As High As 72%

You're a hypocrite to single out Trump's "Make America Great Again" (reciprocal trade agreements) when other countries engages in their own "Made In XYZ country" programs

http://ec.europa.eu/trade/policy/countries-and-regions/countries/china/

When China joined the WTO in 2001 it agreed to reform and liberalise important parts of its economy.

While China has made progress, some problems remain:

a lack of transparency

industrial policies and non-tariff measures that discriminate against foreign companies

strong government intervention in the economy, resulting in a dominant position of state-owned firms, unequal access to subsidies and cheap financing

poor protection and enforcement of intellectual property rights

In 2016 the EU adopted a new strategy on China mapping out the European Union's relationship with China for the next five years. The Strategy promotes reciprocity, a level playing field and fair competition across all areas of co-operation.

The strategy also includes a trade agenda with a strong focus on improving market access opportunities – including negotiations on a Comprehensive Agreement on Investment. It also deals with overcapacity and calling on China to engage with ambition at multilateral level.

As the world second largest GDP, EU will not tolerate China's unfair trade games.

Trump is just copying EU's 2017 trade actions against China!

Apple's contractor Foxconn is Taiwanese (Republic of China) company and has aided China's development i.e. "blood is thicker than water".

Taiwanese ODM companies with US OEM vendors has place a priority with China over other low labour cost countries.

I know Kmart Australia has establish in-source manufacturing base in Indonesia.

EU has already taken action against China, but US mainstream media picked on Trump.

https://www.reuters.com/article/us-eu-steel-china/eu-raises-import-duties-on-chinese-steel-angering-beijing-idUSKBN1780VU

EU already raises import duties on Chinese steel in 2017.

https://www.zerohedge.com/news/2018-03-06/europe-renews-tariffs-chinese-steel-pipes-high-72

European Union Renews Tariffs On Chinese Steel Pipes As High As 72%

http://ec.europa.eu/trade/policy/countries-and-regions/countries/china/

When China joined the WTO in 2001 it agreed to reform and liberalise important parts of its economy.

While China has made progress, some problems remain:

a lack of transparency

industrial policies and non-tariff measures that discriminate against foreign companies

strong government intervention in the economy, resulting in a dominant position of state-owned firms, unequal access to subsidies and cheap financing

poor protection and enforcement of intellectual property rights

In 2016 the EU adopted a new strategy on China mapping out the European Union's relationship with China for the next five years. The Strategy promotes reciprocity, a level playing field and fair competition across all areas of co-operation.

The strategy also includes a trade agenda with a strong focus on improving market access opportunities – including negotiations on a Comprehensive Agreement on Investment. It also deals with overcapacity and calling on China to engage with ambition at multilateral level.

-------

https://www.export.gov/article?id=Argentina-trade-barriers

Tariff Barriers

For countries outside the MERCOSUR area, Argentina and its MERCOSUR partners established the MERCOSUR common external tariff (CET) on January 1, 1995. The CET currently ranges from zero to 20 percent for most products. However, some products in the automotive sector can reach 35 percent.

MERCOSUR group's tariff barriers = self interest and group building.

-------

https://www.nytimes.com/2017/03/20/business/economy/china-us-trade-tariffs.html

From March 2017, China has higher trade tariffs on US built cars before Trump's response.

//China has been engaged in trade war against US before Trump's actions.

From Musk's March 8th, 2018, China already has 25 percent import duty on US made cars before Trump's response.

BLINK: After Trump Tirade, China Pledges To 'Significantly' Lower Tariffs, Protect Intellectual Property

If true..interesting...wait to see how this plays out. :P