Kudlow: Squeeze won't ease; China preps more tariffs

Kenny Grant
August 8, 2018

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

Trump initially proposed 10 percent tariffs on an additional $200 billion of Chinese imports, but he told trade officials this week to consider raising that to 25 percent.

On March 1, President Donald Trump announced that the US would be slapping a 25 percent tariff on all steel imports and a 10 percent tariff on all aluminum imports.

In a statement, the Commerce Ministry said China could add duties of 5, 10, 20 or 25 percent on 5,207 types of US imports.

"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. The president's chief economic adviser also revealed there would be a "number of announcements" over the next 30 days covering trade deals with the EU.

"Instead of retaliating, China should address the longstanding concerns about its unfair trading practices", Sarah Sanders, White House press secretary, said on Friday.

The US has already imposed tariffs on Chinese goods worth $US34 billion ($A46 billion), with further tariffs on goods valued at $US16 billion expected to follow.

-China trade at the Chinese Academy of Social Sciences in Beijing, said the tensions had reached a "critical moment".

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The result is that both China and the U.S. are now using government funds to stimulate areas of the economy. "Obviously, the US tariffs won't help and they are going to cause some damage", he said.

While a strong US Dollar combined with a weaker Yuan will make many Chinese goods on the US market still highly competitive in terms of pricing in spite of tariffs, an equal and opposite effect is being felt by US producers whose warehouses of goods that would have normally been shipped off to China are now left to rot. China market has dropped 27% in the last 4 months, and they are talking to us.

President Trump has used tariffs and the threat of new tariffs against countries - particularly China - as part of his economic policy, in an attempt to renegotiate trade deals.

China plans to impose a 25% tariff on imports of US-manufactured solar cells - but the world's biggest manufacture of solar cells now imports few of the cells used to make panels that generate power.

Chinese President Xi Jinping at a meeting in South Africa as a trade war escalates with the U.S.

China signaled Friday that it has no intention of retreating from a trade war. Last year, China imported about $130 billion in goods from the United States. USA tariffs on another $16 billion worth of Chinese imports are set to be enacted at a later date. The US then said it wouldn't back off. That's in stark contrast to the US' one-size-fits-all tariff approach, which was ill-considered, they said.

This latest move comes after it emerged Donald Trump's administration is considering hitting £154bn ($200bn) of Chinese imports with additional levies.

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