Trump Threatens Tariffs on $200B in Chinese Goods

Ivan Schwartz
June 21, 2018

"Just ask yourself: Would China have allowed America to do to it what China has done to America?" he said later.

Trump's proposed new tariffs would amount to the latest round of punitive steps in an escalating rift between the world's two largest economies.

However, after the deadline, trade between the two countries could be muted, affecting all transport modes.

Before the announcement of Trump's latest measures, the head of the global Swiss financial services group UBS, Sergio Ermotti, told the U.S. business channel CNBC on Monday he was concerned the trade conflict between them USA and China could "get out of control". The administration also revived its complaints Tuesday about America's gaping trade deficit with China, which it says reflects an unfair trading relationship. China, claiming the USA had "launched a trade war", retaliated immediately, outlining its own tariffs on United States goods worth $50 billion, including agricultural goods, cars and marine products. That's 90 percent of everything China exports to the USA, from electronics, clothing, toys, tools, you name it.

It wasn't immediately clear when the new tariffs could be put in place, as the trade office has yet to identify the Chinese goods to be penalised or conduct a legal review.

Canada imposes such onerous tariffs on US products - shoes, for instance - that people are forced to "scuff 'em up" in order to "smuggle" them home, the president said, seemingly confusing tariffs with duties.

These tariffs are not set to come into effect until July 1, as consultation on the final list ended late last week.

The new move, which sent stock markets down yesterday, follows through on the threat by Trump to pursue "additional tariffs" if China engaged in retaliatory actions directed against American exporters or American companies operating in China.

"Canada is not going to take advantage of the United States any longer".

The White House plans to release a report later Tuesday detailing efforts by China to acquire what Navarro called the "crown jewels" of American technology and intellectual property.

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"Rather than altering those practices, it is now threatening United States companies, workers and farmers who have done nothing wrong".

The Russell 2000 index fell just 0.22% in midday trade as it's made up of small-cap stocks which are closely tied to the USA economy and have less exposure to the global market.

Wall Street then followed with a fall of almost 300 points in the Dow.

Beijing could also seek to make life hard for big United States companies that rely on the Chinese market for a big chunk of their revenue.

Spreadbetters suggested a subdued start for European shares, with FTSE futures off about 0.1 percent.

"Such practice of imposing extreme pressure and blackmailing is contrary to the consensus the two sides have reached through rounds of consultations, and disappoints the worldwide community", the spokesperson said.

So it's no surprise that the massive tariffs President Donald Trump has threatened and China's response could lead to a trade war that would cripple the iPhone company, and Apple CEO Tim Cook has been working behind the scenes with both governments to make sure it stays out of the crossfire.

Zhang said investors faced the triple-whammy of the Sino-U.S. trade spat, Beijing's regulatory crackdown on riskier lending practices and tighter global liquidity. "In other words, both China and the US are determined that they're going to be the world leaders in the most important industries of tomorrow - aerospace, artificial intelligence, of course computing", he said.

The tariffs would start to slow USA growth, economists warn.

Despite the Chinese government's repeated pledges to further open its economy, 46 percent of respondents in the European Union Chamber of Commerce in China's annual business survey said they thought the number of regulatory obstacles they face in China would increase over the next five years. China clearly disagrees, which is why we believe we are heading into a tit-for-tat scenario, in which we believe the USA will soon raise the amount subject to tariffs to USD150bn.

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