Kudlow: Squeeze won't ease; China preps more tariffs
Kudlow: Squeeze won't ease; China preps more tariffs
White House economic adviser Larry Kudlow. Nicholas Kamm—AFP
06 August, 2018, 06:28
Speaking after China had announced its new tariff move, White House economic adviser Larry Kudlow warned that Beijing should not underestimate the determination of Trump. The White House initially announced tariffs - 25 percent on steel and 10 percent on aluminum - arguing they would protect USA companies and allow for the creation of new manufacturing plants - key Trump promises in the 2016 presidential campaign.
At a time when China is opening its domestic market to more foreign trade and investment than at any time in China's modern history, policy makers in Beijing have opted to retaliate against America's ongoing tariff onslaught in a manner that will force USA producers to apprehend the reality that in a prolonged trade war of Washington's own making, United Statesindustries will be the penultimate victims. The United States slapped duties on $34 billion worth of Chinese goods, provoking a similar response from China.
Fiat Chrysler also cut its 2018 revenue outlook after sales in China slumped, as buyers postponed purchases in anticipation of lower vehicle tariffs. But Bloomberg pointed out that US stocks have yet to regain strong January performances since the escalating trade war.
In a statement released on its website the ministry said the tariffs were necessary because the United States side has "repeatedly escalated the situation despite the interests of both enterprises and consumers". On Wednesday, the administration proposed raising the potential tariffs on the $200 billion list to 25 percent from an originally announced 10 percent.
While soybean exports continued to rise in July - as Chinese importers rushed to buy ahead of the retaliatory tariffs Beijing imposed in July - US shipments of automobiles, aircraft and pharmaceuticals fell.
"The magnitude, we don't know yet", Kassis said.
The US, the world's largest economy, has a trade deficit of nearly Dollars 500 billion with China, the world's second largest economy.
China's decision to threaten $60 billion of us goods marks the first time this year that Beijing has not tried to match Washington's tariffs dollar for dollar.
During a July 20 CNBC interview, Trump said that he was willing to put tariffs on all $505.5 billion dollars worth of goods that China exports annually to the U.S. It said the retaliatory duties of 25 percent, 20 percent, 10 percent or 5 percent on 5,207 products will be imposed "if the US side persists in putting its tariff measures into effect".
"China to take necessary countermeasures to defend the country's dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries in the world", the statement said.
China has threatened to increase tariffs on imported American goods if the United States follows through with its threats to ratchet up the trade war.
Trump apparently believes he can control the response of U.S. trading partners to his threats and intimidations, and that he can conclude token trade deals, if necessary, to avoid falling over the trade cliff of currency devaluations.
Today's threat targeting a smaller amount of USA goods reflects the fact that Beijing is running out of products for retaliation due to its lopsided trade balance with the United States.
The Chinese are unable to match US tariffs on a dollar-per-dollar basis but Beijing can make it hard for USA companies doing business in China.
For example, he claimed that China was financing advertisements to convince Americans to stop Trump's trade agenda.
"Every country on earth wants to take wealth out of the United States, always to our detriment", Trump tweeted, "I say, as they come, Tax them".
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