Global stocks slump - yen rises as USA raises stakes in trade conflict

11 July, 2018, 08:09 | Author: Orlando Hughes
  • A woman walks past an electronic board showing the Hong Kong share index at a bank in Hong Kong on Tuesday

On Friday, Beijing retaliated with mirror measures against U.S. imports hours after Washington introduced 25 percent trade tariffs on $34 billion worth of Chinese goods. US President Donald Trump had warned then that his country may ultimately impose tariffs on more than $500 billion worth of Chinese imports.

"In light of China's decision to respond to the investigation by imposing duties on USA goods, the Trade Representative proposes a modification of the action taken in this investigation". President Donald Trump has already ordered tariffs on another $16 billion in Chinese exports for later this summer, after the comment period on the American list closes, and China will retaliate again.

Tne Trump administration has announced additional China tariffs, say insiders. Oil had risen the previous day, supported by a larger-than expected USA stock draw and supply concerns in Norway and Libya. The President imposed steel and aluminum tariffs on these countries, and has threatened to hit them with levies on imported cars and trucks. But China only bought about $135 billion in US goods previous year, meaning it will run out of American products to tax before it matches Trump's latest move.

More than 6,031 product lines are affected by the proposed tariffs, including seafood, fruits and vegetables, grains, tobacco, vehicle rearview mirrors and burglar alarms.

Mr Lighthizer said the products targeted by the tariffs are those that benefit from China's industrial policy and forced technology transfer.

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The US trade deficit in goods with China ballooned to a record $375.2 billion past year, stoking his anger over trade policies.

Beijing thus far has vowed to respond in kind to any USA trade action.

The new list of goods to face 10 per cent punitive duties includes frozen meats, live and fresh fish and seafood, butter, onions, garlic and other vegetables, fruits, nuts, metals, and a massive list of chemicals, as well as tires, leather, fabrics, wood and papers.

At $US450 bilion, the list becomes comprehensive and supply-chain damage seems nearly inevitable; numerous goods on the longer list are imported largely from China, making substitution essentially impossible. They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory. "Reliance on more and more taxes as a means to drive change is a high-risk strategy with US importers and exporters at the heart". But Mr Trump hasn't backed down, arguing that China's unfair trading practices are hurting American workers. "But it could mask over factors that could also weigh on equities in the longer run, such as tighter monetary policies led by the United States".

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