Trump Considers Raising Proposed Chinese Tariffs

Screen Shot 2018 08 02

The US administration's trade spat with China looks set to escalate significantly after President Donald Trump is reported to be considering more than doubling the proposed new tariffs on goods imported from China.

The Trump administration says it's looking into whether to increase the proposed tariff on 200 billion us dollar worth of Chinese imports from 10 percent to 25 percent.

"Instead of achieving one's own goal by doing this, we believe it will only hurt one's own interests", he told reporters at a press conference after the Asean-China ministerial meeting in Singapore.

China's vice-trade minister Wang Shouwen said last month in Geneva that "for any talks to be successful, no party should point a gun at the other party". It will be September at the earliest before the USA decides whether to impose those tariffs.

Beijing has pledged equal retaliation, although it only imports about $130 billion of USA goods.

Wang said Beijing recognizes that the US side was trying to put pressure on China.

The Asian giant has considered the higher USA tariffs as a violation of the World Trade Organization norms and that a threat would only collapse the industrial and global value chain.

The United States has already slapped 25% tariffs on Chinese goods worth $34 billion to punish Beijing for what it says are its unfair trade practices. "If the USA takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests", spokesman Geng Shuang said at a regular press conference yesterday.

That strategy, it said, "doesn't work for China at all". However, the Chinese bourses fall under the pressure on the news that Trump is considering 25% tariffs on Chinese goods worth $200 billion against 10% that are being discussed now. However, this unwritten agreement includes the expectation of the US President that the European Union would fund 9 to 11 liquefied natural gas (LNG) ports to absorb "vastly" more shipments from the United States.

"Discussions are underway now with Beijing to see whether conditions are right to hold fruitful negotiations", the report said.

The US dollar has strengthened by 5 per cent against China's yuan since the beginning of the year and has risen by around 3 per cent on a trade-weighted basis against the currencies of other major USA trading partners.

- Tariff increases from 10% to 25% follow CNY currency fall.

Trade tensions between the USA and China have been escalating for months, driven by President Trump's aggressive rhetoric and policy positions.

The White House has also threatened other major United States trading partners like the European Union, Canada, and Mexico with tariffs, hoping that they will eventually be forced to come to the negotiation table.

The US equity index is up by more than 5 per cent since the start of 2018, and 25 per cent since the start of 2017, while China's Shanghai composite index has fallen by 13 percent and 7 per cent respectively.

But slowing growth, wilting confidence, and trade war fears are not likely to deter major central banks moving away from their ultra-loose monetary policies put in place during the last financial crisis. Despite the fact that some USA media have linked the proposal to hike tariffs to a sharp drop in the Chinese currency, senior U.S. officials downplayed that idea in a telephone call with reporters.

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