Ernst: Trump tariffs on China are a tax on farm families

Sean Reid
June 23, 2018

This would come in addition to the tariffs on $50 billion worth of imports, should China retaliate; a move which effectively confirms that a damaging trade war is underway, leaving many questioning where the endpoint will be?

"Just ask yourself: Would China have allowed America to do to it what China has done to America?" he said later. Founder Thanos Papasavvas said in a note Tuesday that trade disputes would have a more significant impact in volatility than what markets were pricing in.

The declines in the US markets followed a global rout.

Beijing responded by saying it would hit 659 U.S. products worth $50bn - including agricultural products, cars and marine products - with a similar tax.

While Trump is said to have rejected China's offer early this month to increase purchases of US goods by $70 billion, Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday the two sides had made progress in their three rounds of talks.

In return, Canada, Mexico and the European Union levied steep tariffs on US manufactured goods and agricultural products.

China responded with the threat of a penalty of the same size on U.S. exports, prompting Mr. Trump to order U.S. Trade Representative Robert Lighthizer to target another $200 billion in Chinese goods for 10 percent tariffs.

These penalties would go into effect, the president said, "if China refuses to change its practices" and proceeds with its plans for retaliatory tariffs.

That would leave about $120 billion available for a tariff hike, falling short of Trump's $200 billion target.

ASA is disappointed and highly concerned that trade tensions continue to ratchet up rather than deescalate between the two countries and that its repeated requests to the Administration for a non-tariff solution that does not threaten the market stability and livelihoods of soy growers has not been put forward. But the rhetoric is intensifying, with Trump lashing out at Beijing over its threat to retaliate against the administration's latest proposed tariffs.

Trump said that the actions China announced on Friday "clearly indicate its determination to keep the United States at a permanent and unfair disadvantage", which, according to him, "reflected in our massive $376bn trade imbalance in goods".

"The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends", China's Commerce Ministry said.

The Dow Jones industrials are down 291 points, or 1.2 percent, to 24,697, after dropping more than 400 points in morning trading.

China's Commerce Ministry criticised the latest threat of tariffs, saying it was an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations, and is a disappointment to the worldwide community".

The dispute is part of broader US complaints about global trading conditions that have prompted Trump to raise duties on steel, aluminum, washing machines or solar panels from Canada, Europe, Japan and South Korea.

Trump had announced a 25 percent tariff on up to $50 billion in Chinese imports.

"If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods", President Trump declared.

But Beijing's mention of "comprehensive measures" suggests that it would go beyond tariffs, said Jake Parker of the U.S.

Shares of large US companies with significant overseas business were hit especially hard. Chinese tourism to South Korea was cut almost in half, hurting hotels, duty free stores and other travel businesses.

One in five foreign companies in China feels compelled to hand over technology for market access, a business group said Wednesday, highlighting a key irritant in an escalating U.S.

Apparently, aware of the advantage he has in this trade war, Trump said his first measure - of imposing tariffs on $50bn worth of goods - was an initial step toward bringing balance to trade relationship with China.

Then China followed suit, unveiling 25 per cent duties on $50 billion in U.S. imports - matching the United States rates. The White House is finalizing a list of $16 billion in additional goods it will sanction later.

China is retaliating by raising import duties on 34 billion dollars (£25 billion) worth of American goods, including soybeans, electric cars and whiskey. And Beijing says it would impose tariffs on $16 billion more if the United States does so, too. But Trump has been unusually direct about threatening to disrupt such a large volume of Chinese exports.

The pan-European FTSEurofirst 300 index .FTEU3 lost 0.72 percent and MSCI's gauge of stocks across the globe.MIWD00000PUS shed 0.81 percent its emerging market index.MSCIEF fell 1.9 percent.

By revenue, chipmakers face the greatest risks in escalating trade tensions with Beijing.

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