2018/03/21

America's new trade war towards China: levy tariffs

As America’s largest commodity trading partners (excluding service) in 2017, China is now facing a possible powerful hit in its global trade.

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A group of 25 major U.S. retail companies, including Walmart, Costco and Best Buy, on Monday urged the Donald Trump administration not to impose sweeping tariffs on Chinese imports.

The situation remains fluid, and Trump has previously in his presidency backed off economic threats at the last minute. But he has shown a recent willingness to unilaterally impose tariffs — even amid objections from advisers who fear starting a global trade war and economists who warn such actions could ultimately hurt U.S. businesses.

Trump was particularly determined to follow through on tariffs on China, as criticism of U.S.-China relations was at the center of his presidential campaign, according to the administration officials, who spoke on the condition of anonymity to discuss the president’s plans.

If implemented, the tariff package would be one of the broadest sets of economic actions imposed by a modern U.S. president against China and could draw retaliation, fraying the trade partnership between two of the world’s largest economies.

The United States exported $130.4 billion in goods to China, but it imported nearly four times as much, running a trade deficit of $375.2 billion, according to the U.S. Census Bureau.

Chinese manufacturers might assemble these products or put on the finishing touches, but the country does not export as many products to the United States that are entirely made in China, said Nicholas R. Lardy, a senior fellow at the Peterson Institute for International Economics.

Lardy also said that penalizing China probably would not help U.S. producers, even if the tariffs succeeded in stemming the inflow of goods from China.

Beyond the escalating tensions with China, Trump’s pivot to protectionism has put much of the world on edge. His 2016 campaign was built around promises to put “America first” on every issue, but some aides managed to scale back his plans for trade restrictions in 2017 as the Republicans muscled tax cuts through Congress.

Trump’s approach to China has been uneven. He has tried to both befriend Chinese leader Xi Jinping while also isolating him, particularly on economic issues. On Sunday, the Treasury Department had to backtrack on an embarrassing misstep when a senior official said he had suspended economic talks with China, when a formal decision had not yet been made.


What’s next of the Sino-US trade relationship? We’ll just wait and see.

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