Trade tariffs will harm the world

Pauline Gross
July 12, 2018

The Wall Street Journal, citing "people with knowledge of the previous rounds of negotiations" said the offer made by China so far, "whether they are increasing purchases of U.S. products or the gradual opening of financial-services sector" had "failed to solve Washington's demands for deeper structural changes".

- European Union - On June 1, Trump made good on several months of threats and imposed tariffs of 25 percent on steel and 10 percent on aluminum from the EU, Canada and Mexico.

The country has informed the WTO it plans to impose retaliatory measures on United States goods to the tune of 50 billion yen (395 million euros, $455 million), after failing to persuade Washington to exempt it from the tariffs.

In addition, the U.S.is considering separate duties on a further US$16 billion in Chinese goods, after a public hearing later this month.

The market slide may have been contained in part by speculation the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.

Oliver Jones from Capital Economics has warned that China's response to Trump's latest tariff threat could hit the United States stock market hard. "By doing this, the United States is hurting China, hurting the whole world, and hurting itself". Members of Congress pushed back Tuesday night and early Wednesday against what they saw as harmful penalties that would leave American farmers and consumers caught in the crossfire.

As with previous rounds of tariffs, the new list takes special aim at "Made in China 2025" products. However, analysts say there's little chance China will back down on the plan, which it considers crucial for developing its huge economy. However, China has vowed to match every tariff tit-for-tat, and will likely follow through.

However, Lighthizer still left some room for potential negotiations with China before the new round of tariffs. That would leave China only US$80 billion for further retaliation.

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But China also faces difficulties in retaliating directly: it ships far more goods to the United States ($506 billion past year, according to USA figures) than come back in the opposite direction ($130 billion).

Investors fear an escalating Sino-American trade war could hit global growth and damage sentiment.

Tuesday's announcement was met with backlash from some quarters.

"Although I have supported the administration's targeted efforts to combat China's technology transfer regime, tonight's announcement appears reckless and is not a targeted approach", said Sen.

Trump has said continuously that China has taken advantage of the U.S. economy, and he has vowed to hit almost all the country's products with tariffs, as much as $450bn.

ENERGY: Benchmark U.S. crude gained 54 cents to $70.92 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price worldwide oils, gained 85 cents to $74.25 per barrel in London.

"Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise", David French, the group's senior vice president for government relations, said in a statement. There might even be a temporary boost to second quarter data, as exporters may have attempted to sell more before the imposition of tariffs.

Stock markets around the globe fell as the latest U.S. announcement and the Chinese response indicated a deepening and protracted trade conflict between the world's two largest economies that could hit global trade and growth.

Other reports by GizPress

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