China reveals plan to tax $60 bn worth American goods

Glen Norman
August 6, 2018

"China promises that it will continue to unswervingly push forward reform and opening-up based on established arrangements and pace, firmly support economic globalization, firmly safeguard free trade rules and multilateral trade mechanisms to realize joint development and share prosperity with all countries that pursue progress", the commission said.

Second, the US wants China to purchase at least $100 billion more in US goods, mostly from Midwest US agribusiness and manufacturing.

The US, the world's largest economy, has a trade deficit of nearly Dollars 500 billion with China, the world's second largest economy.

"Year-to-date, the goods and services deficit increased $19.6 billion (R260 billion), or 7.2%, from the same period in 2017", the Census Bureau said in a press release.

China announced earlier Friday it plans to impose tariffs of up to 25 percent on $60 billion of US goods, as the trade salvos between the world's two largest economies continued. The country exported about $500bn in goods to the U.S. and imported about $130bn. These countries have retaliated. The global economy now appears to be living that reality, with the trade war settling into a regular rhythm of counterblows.

The vehicle industry seems to have been the most affected so far, with three major automakers recently warning that changes to trade policies are hurting performance. "It's time to stop imposing nonconstitutive tariff action and resolve the very real issues".

Fiat Chrysler also cut its 2018 revenue outlook after sales in China slumped, as buyers postponed purchases in anticipation of lower vehicle tariffs.

"We said before that this round of tariffs amounted to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China", a major trade group, the National Retail Federation, said in a statement last week.

Despite the escalating trade row, the economy's resilience has been remarkable, said Tu Xinquan, director of the China Institute for WTO Studies at the University of International Business and Economics. "The implementation date will be subject to the actions of the U.S., and China reserves the right to continue introducing other countermeasures".

"I think that China will actually feel more pain" than the U.S., Zarit said last month. Tesla has also reportedly increased prices on two of its models. Trade wars involve not only tariffs but also non-tariff barriers to trade.

Under the new plan, tariffs of 25% would be applied.

Other firms in the broader industry are also considering their options.

The tariffs follow talks this spring that failed to produce an agreement.

Tyson Foods recently cut its profit forecast, saying retaliatory duties on USA pork and beef exports had lowered U.S. meat prices. "Likewise other countries. We are Winning, but must be strong!"

China has said new duties will be applied only if Washington pulls the trigger on its new tariffs.

"At minimum, we will make much better Trade Deals for our country!"

The measures were decided at a meeting of China's State Council on Friday.

The escalating dispute, with no settlement in sight, has fueled fears it might chill global trade and economic growth.

Beijing had retaliated by imposing similar charges on the same amount of USA products. If they refused, as China has, then Trump said he would use the tariffs to punish the countries.

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