Thursday, 16 August, 2018

Trump is losing the trade war, according to his favourite measure

China threatens tariffs on $60 billion in US goods Getty Images
Jan Cook | 08 August, 2018, 21:00

When President Donald Trump announced an import tariff on Chinese steel in March, China responded with its own set of tariffs. When a big USA retail chain or an equipment manufacturer has to pay 10 or 25 percent more to get steel from Canada or a certain part from China, that us company has to pay the tax when it imports that item.

"Because the US side has repeatedly escalated the tension, disregarding the interests of enterprises and consumers of both sides, China has to take necessary countermeasures to defend the country's dignity and the interests of the Chinese people, defend free trade and the multilateral system, and defend the common interests of all countries in the world", the ministry said.

"For the goods that have less impact on China's industrial production and consumption, the tariff rates are much higher, but that can effectively hit back on the U.S. when it is necessary to levy", he said.

'Tariffs are working big time.

His comments came a day after Beijing threatened retaliatory tariffs on more imports from the USA, in response to news at the end of last week that Trump is considering more than doubling the proposed new tariffs on $200bn of goods imported from China. That's a negligible amount for China, which imported 17 million tons total a year ago, according to the US Census Bureau.

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China has now either imposed or proposed tariffs on $110 billion in US goods, representing the vast majority of China's annual imports of American products. The Chinese side seem to be seeking to match that ratio with the new proposals.

Chinese officials are trying to reassure markets and the local population that the USA moves would have little impact.

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National Economic Council Director Larry Kudlow said in a Bloomberg Television interview Friday.

"Tariffs are working far better than anyone ever anticipated".

FILE - A clerk counts Chinese yuan and USA dollar banknotes at a branch of Bank of China in Taiyuan, China, Jan. 4, 2016.

The United States accuses China of using predatory tactics to obtain US technology, including outright cybertheft and forcing American companies to hand over trade secrets in exchange for access to the Chinese market.

"China's differential tax rate countermeasures are rational and restrained", the Ministry of Commerce said in a separate statement on its website. "They expect solid economic growth momentum amid policy fine-tuning", said an article in the official English-language China Daily newspaper, citing Chinese economists. Mr Trump suggested that his use of tariffs has directly damaged the Chinese economy, something that he said would continue unless they agreed to his demands, which includes allowing more USA exports and investments.

"As the total value of goods under tariffs shoots up, China has little choice but to use LNG and others to top up the value", said Lin Boqiang, professor on energy studies at China's Xiamen University.

The latest tariffs come as the trade war continues to escalate and Mr Trump attempts to force Xi Jining's government to change its practices.

Talks with China and Canada, however, have remained very frosty, and Trump has promised to punish both economies if he doesn't get his way. "Obviously, the US tariffs won't help and they are going to cause some damage", he said.

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