Stocks drop again as US, China trade dispute escalates

Glen Norman
April 5, 2018

Investors are wondering whether one of the worst trade disputes in many years could now turn into a full-scale trade war between the world's two economic superpowers.

U.S. Commerce Secretary Wilbur Ross brushed off concern about a trade war. "Tariffs are taxes on consumers and a drag on the nation's economy", National Retail Federation President Matthew Shay said in a statement Wednesday.

Wang said it was "not possible" to immediately reduce the trade imbalance by US$100 billion (NZ$137 billion) as Trump had demanded, because it required structural change in the relationship.

Beijing has been adamant that it did not want a trade war, but that it would not not back down under United States pressure.

China quickly hit back on Wednesday at Trump administration plans to slap tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key USA imports including soybeans, planes, cars, whiskey and chemicals.

Wednesday's announcement means there are now two U.S.

"These are some of the companies most exposed to potential tariffs".


Earlier in the morning, he offered a more comprehensive explanation for the tariffs, writing: 'We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.

The technology investigation was launched under a little-used Cold War era law, Section 301 of the U.S. Trade Act of 1974.

Meanwhile, according to Christopher Balding, an associate professor at the HSBC Business School in Shenzhen, the US and Chinese tariffs might generate different results, seen as how China is willing to target products that could create political issues for Trump, specifically soybeans, automobiles and planes.

After an early jolt, stocks rallied and finished higher Wednesday as investors bet that back-and-forth tariff threats between the US and China won't blossom into a bigger dispute that damages global commerce.

Meyers also told The Hill that the firm has seen a large increase in activity targeting US law firms since June 2017. Cutting deficit requires efforts from both the sides.

Beijing had repeatedly said it did not fear a trade war with the US but that it would prefer dialogue to prevent such an outcome.

The United States and China may pursue negotiations to resolve deepening differences over trade, a USA trade official said on Wednesday, but he declined to say whether any new high-level meetings were planned. Farming states were also among Trump's staunchest supports in the election. "Both sides benefit by positive solutions that lower barriers". China is the world's largest soybean importer, and buys about 60 per cent of the USA soy crop, making it, at US$14 billion (NZ$19.2 billion), the most valuable U.S. agricultural export to China.


But last month, Trump accused China of continuing to conduct and support "unauthorized intrusions into, and theft from" USA company networks when announcing new tariffs on China - raising the specter that Beijing may have run afoul of the agreement.

"The remaining products were ranked according to the likely impact on USA consumers, based on available trade data involving alternative country sources for each product", the official, who spoke on condition of anonymity, told Reuters.

The Chinese list Wednesday included soybeans, the biggest US export to China, and aircraft up to 45 tons in weight. The agency said it chose products to minimize the impact on the USA economy and consumers.

However, as part of its response, the USTR also lodged a WTO case last month challenging Chinese policies it said unfairly limit foreign companies' control over their technology.

Trump gives US Trade Representative Robert Lighthizer 15 days to draw up a list of products to target, which Lighthizer said would be drawn from the goods Beijing has said it wants to dominate. The 25 percent tariffs come on top of any existing levies.

The US worries that China is involved in cyberespionage and unfair government subsidisation that is helping China advance in technology. China also has a separate development strategy for artificial intelligence, published previous year.

"Losses have eased a bit as investors try to weigh the possibility that this is simply a negotiating ploy on both sides", he said. Beijing will also target USA corn, cotton, beef, orange juice, whiskey, tobacco, and several lubricants and plastic products.


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