Newsdeck

Trump trade war to become reality as China tariffs hit

By AFP 5 July 2018
Caption
US President Donald J. Trump at the official reception to the opening day of the G20 summit in Hamburg, Germany, 07 July 2017. EPA/DANIEL KOPATSCH

After months of threats and dwindling hopes the two sides would pull back from the brink of all-out trade war, steep US tariffs on tens of billions in Chinese goods are due to take effect at midnight Thursday.

China already has announced it will respond in kind on the same schedule as the United States while President Donald Trump has countered with a threat to double down by progressively ratcheting US penalties up to a total of $450 billion in goods — which would represent the lion’s share of all of China’s exports to the United States.

Trump’s escalating global trade dispute has already affected the economy, with punitive duties now in place for steel and aluminum and the White House threatening slap duties on auto imports.

Prices are rising, especially for steel and aluminum, and companies are starting to feel reticent about investments or plan to shift production overseas to avoid retaliation against US exports.

Trump says the measures are aimed at leveling the playing field for American companies, which he says will become more competitive.

But for firms like Mid-Continent Nail Corporation in Missouri, the largest US nail manufacturer, rising steel prices have meant immediate job losses and threaten to force the company to shut down operations altogether.

 

– Tariffs start Friday –

 

Trump initially threatened to hit China with 25 percent tariffs on a list of goods worth $50 billion annually, over what Washington says is the rampant theft of US technical know-how.

But the list was pared down to 818 product categories worth more than $32 billion after US companies requested exemptions for key imports.

A second tranche of 284 goods valued at $16 billion — which would bring the total to $50 billion — will be targeted after they undergo an additional process of review and public comment, which could lead to a lower total.

The tariffs hit a broad spectrum of Chinese goods — like passenger vehicles, radio transmitters, aircraft parts and computer hard drives — from industries the Trump administration says have benefited from unfair trade practices.

Beijing will hit back with tariffs initially on nearly $30 billion in US goods, also taking effect Friday, including vehicles and many agricultural and food products, such as soybeans, which will hit US farmers hard.

The remaining $15 billion would be imposed in the second phase would target crude oil, propane and chemicals.

Added to the tariffs are the increased scrutiny on Chinese investments in the United States, which the government says are sensitive for economic or national security reasons, which already has reduced incoming investment.

 

– Economic threat –

 

Economists have for months warned of the potential damage to the US and global economies from aggressive trade policies that evolve into protectionism, which would raise prices and upend global supply chains.

The Trump team has paid little heed to those concerns and Commerce Secretary Wilbur Ross this week called the warnings “premature and probably quite inaccurate.”

Trump himself tweeted this week that the economy is doing “perhaps better than ever” even “prior to fixing some of the worst and most unfair Trade Deals ever made by any country.”

But American businesses increasingly are raising their voices in alarm about the potential for dire consequences.

The influential US Chamber of Commerce, with headquarters just steps from the White House, urged Trump this week to reconsider his actions, saying the counter-tariffs now affected $75 billion in American exports and endangered US jobs.

While Trump touts announcements of jobs created in steel plants due to the tariffs, manufacturing industries warn that many more jobs will be lost in companies producing autos, auto parts, appliances and other goods that depend on imported components.

One study said the losses could reach as high as 400,000 jobs.

Iconic American motorcycle brand Harley Davidson announced plans to move production overseas to evade the EU’s retaliatory tariffs, drawing a barrage of attacks on Twitter from Trump.

But a manufacturing survey from the Institute for Supply Management shows they are not alone, while other companies say uncertainty is delaying investment plans.

The trade war arrives with many companies already struggling to find workers and facing backlogs to receive supplies.

Christine Lagarde, head of the International Monetary Fund, warned the tit-for-tat cycle of retaliation would create “losers on both sides.”  DM

Gallery

Watch Pauli van Wyk’s Cat Play The Piano Here!

No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.

Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.

It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.

But our job is not yet done. We need more readers to become Maverick Insiders, the friends who will help ensure that many more investigations will come. Contributions go directly towards growing our editorial team and ensuring that Daily Maverick and Scorpio have a sustainable future. We can’t rely on advertising and don't want to restrict access to only those who can afford a paywall subscription. Membership is about more than just contributing financially – it is about how we Defend Truth, together.

So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.


Comments

Please note you must be a Maverick Insider to comment. Sign up here or if you are already an Insider.

Analysis

Public Protector vs Gordhan and the role of State Security in latest legal battle

By Marianne Thamm

Don't believe Han Solo's evasion of Empire TIE Fighters. There are many miles of vacuum space between each asteroid in a field.