Trump threatens extra tariffs on US$200b of Chinese goods

Ivan Schwartz
June 19, 2018

"Trump directed the US Trade Representative's office to begin drawing up a list of $200 billion worth of Chinese goods to hit with a 10% tariff, dwarfing the size of previous trade actions against China".

Specifically, Apple is said to fear that the Chinese government will cite national security concerns to impose bureaucratic delays on its supply chain and finished products, mirroring recent US actions that have penalized Chinese telecom companies Huawei and ZTE.

China slapped a 25 percent tariff on 545 American imports including agricultural products, seafood, cars and whiskey.

The White House's move is expected to further ramp up trade tensions with Beijing and possibly risk Trump's push to denuclearize the Korean peninsula.

"Although many think this might be another bluff from Trump, markets are likely to stay nervous to trade-related headlines for now".

"After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced", Trump said in a statement on Monday.

The move comes just three days after the president detailed an initial $50 billion in imports that would be taxed an additional 25 percent, which he said was punishment for the theft of intellectual property from USA companies, as well as the trade gap between the two countries.

Shanghai-based hedge manager David Dai said the rapidly escalating trade tensions between Washington and Beijing have added woes to an already fragile stock market and make calling the bottom very hard.

"However, and unfortunately, China has determined that it will raise tariffs on USD50 billion worth of United States exports".

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The dollar fell 0.45 percent to 110.06 yen following Trump's tariff comments.

Beijing immediately retaliated with a 25-percent tariff on 545 American products worth $50 billion, which will come into force on the same day.

"Donald Trump is once again at the centre of market sentiment, as fears over an impending trade war are heightened yet again", noted Joshua Mahony, market analyst at IG trading group. "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong", he said.

Trump is ratcheting up the pressure on China as he's trying to convince US lawmakers to let Chinese telecom company ZTE Corp. remain in business.

"The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the USA, but of the world", the ministry said.

United States President Donald Trump has made good on his pledge to escalate the US-China trade war through a cycle of tit-for-tat exchanges, as America is set to hit back at Chinese retaliations after the US levied tariffs on $34 billion worth of Chinese goods over the weekend.

Further market falls could also trigger a vicious cycle of selling, as a large proportion of shares in China's stock market are pledged against loans, and could potentially face margin calls, he said. "Not due to announcements", he said.

In a statement, Mr. Trump says he has an "excellent relationship" with Xi, "but the United States will no longer be taken advantage of on trade by China and other countries in the world".

China had offered to ramp up purchases of American goods by only $70 billion to help cut the yawning trade imbalance with the United States, whereas Trump had demanded a $200 billion deficit cut.

Other reports by GizPress

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