Weak Exports Push US Trade Deficit To Five-Month High

Kenny Grant
September 11, 2018

Asian markets were mixed Thursday on fears that the USA would soon impose tariffs on another $200 billion of Chinese goods, as public consultations drew to a close.

While the US-China trade-war is real, and happening, Apple wrote a letter on Friday to trade officials.

The US imported $505bn in goods from China last year, and this year until the end of July, Chinese imports are almost 9% higher, according to official US data.

Cell phones, the biggest US import from China, have so far been spared, but would be hit if Trump activates the new $267 billion tariff list.

President Donald Trump suggested that Apple could face no taxes if the company moves its manufacturing process to the USA from China.

But there have been no further discussions with China to try to resolve the bitter dispute with Beijing, and Trump could announce the next step, which would impose steep duties on half the goods the United States imports from the world's second largest economy, as soon as Thursday.

Many American companies that rely on targeted Chinese imports are bracing for the next round of tariffs to hit, with some wondering whether they can absorb the higher costs or instead will need to pass them along to their customers - or find alternatives suppliers outside China.

This would further escalate the trade war Trump is leading against China.

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With no settlement in sight, the spiraling conflict between the two biggest economies has fed fears it will chill global trade and economic growth.

Cell phones are the biggest USA import from China, and so far they've been spared. Doing so would escalate a confrontation between the world's two biggest economies and likely squeeze US companies that import everything from handbags to bicycle tires.

"That totally changes the equation", Trump said. These tariffs are the administration's response to its charges that Beijing uses predatory tactics to try to supplant USA technological supremacy.

China's trade surplus with the US has, therefore, risen almost 15 percent from January to August 2018.

His comments contradict the more diplomatic remarks earlier Friday from his top economic adviser Larry Kudlow who said talks with Beijing are continuing to try to defuse the conflict, and that he was hopeful that a solution could be found.

"We are still talking with China on a number of issues ..."

Chinese exporters of lower-value goods such as handbags and surgical gloves say US orders have fallen off. Imports rose 20.9 percent to $189.5 billion, down from 21 percent. It brought in about $6.1 billion in revenue a year ago, according to an estimate from analyst firm Bernstein.

Away from trade developments and emerging market turmoil, attention will be directed towards the U.S.jobs report coming out later today which will offer fresh insight into the health of the USA employment sector. The tariffs would pressure China to stop that behavior, the administration has said.

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Chinese shares were battered with the blue-chip index off 1.4 percent while Shanghai's SSE Composite stumbled 1.2 percent. Singapore slipped 0.6 percent and Taipei shed 1.1 percent, while Bangkok and Jakarta were also sharply lower.

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