U.S. President Donald Trump walks to Marine One while departing the White House in Washington, U.S., September 6, 2018. REUTERS
Aboard Air Force One/Washington (Reuters): US President Donald Trump warned on Friday he was ready to slap tariffs on virtually all Chinese imports into the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days.
The moves would sharply escalate Trump’s trade war with Beijing over his demands for major changes in economic, trade and technology policy. China has threatened retaliation, which could include action against US companies operating there.
Hours after a public comment period closed on his $200 billion China tariff list, Trump told reporters aboard Air Force One that he was “being strong on China because I have to be.”
“The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent it’s going to be up to China,” Trump said. “And I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That totally changes the equation.”
Stock prices slipped after his comments, with the S&P 500 off 0.2%, while China’s off-shore trade yuan currency fell against the dollar.
Trump has already imposed 25% tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors.
The $200 billion list, which includes some consumer products such as cameras and recording devices, luggage, handbags, tires and vacuum cleaners, would be subject to tariffs of 10% to 25%.Cell phones, the biggest US import from China, have so far been spared, but would be engulfed if Trump activates the $267 billion tariff list.
Trump’s threatened tariffs, now totalling $517 billion in Chinese goods, would exceed the $505 billion in goods imported from China last year. But 2018 imports from China through July were up nearly 9% over the same period of 2017, according to US Census Bureau data.
Earlier on Friday, White House economic adviser Larry Kudlow told Bloomberg Television the administration would evaluate public comments before making decisions on the $200 billion tariff list.
The US Trade Representative’s office received nearly 6,000 comments and held seven days of public hearings on the proposed levies.
Most comments were from companies seeking to remove products from the tariff list, arguing there were few, if any alternative sources and the duties would cause financial hardship. Comparatively few applauded the tariffs.
Major technology company Apple Inc. said a “wide range” of its products would be hit by the tariffs, but not its iPhone. It said in a late submission that its AirPods headphones, some of Apple’s Beats headphones, and its new HomePod smart speaker would face levies, causing its shares to slip in late trading.
“Our concern with these tariffs is that the US will be hardest hit, and that will result in lower US growth and competitiveness and higher prices for US consumers,” Apple said in the letter.
Retailers had successfully kept high-profile consumer electronics such as cell phones and television sets off of previous tariff lists. But David French, top lobbyist for the National Retail Federation, whose members include Amazon.com, BJ’s Wholesale Club and Macy’s, said nearly every consumer good could be affected if Trump follows through on all threatened tariffs.
“The Chinese aren’t paying these tariffs, American families are going to pay these tariffs. These are taxes and they’re going to find their way into the pocket book of folks around the country,” French said.
Still talking to China
Kudlow, who heads the National Economic Council, told CNBC the administration was still talking with China about trade issues but so far China had not met US requests.
The United States has demanded that China better protect American intellectual property, cut its US trade surplus, allow US companies greater access to its markets and roll back its high-technology industrial subsidy programs.
“We are still talking with China on a number of issues ... Those talks will continue to go on. We want lower (trade) barriers across the board,” Kudlow said.
Specifically, Kudlow said, the United States was seeking “zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, allow Americans to own their own companies.”
“Those have been our asks for many months and so far those asks have not been satisfied,” he said. “However, hope springs eternal.”
China’s record trade surplus with US adds fuel to trade war fire
Beijing (Reuters); China’s trade surplus with the United States widened to a record in August even as the country’s export growth slowed slightly, an outcome that could push President Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute.
The politically sensitive surplus hit $31.05 billion in August, up from $28.09 billion in July, customs data showed on Saturday, surpassing the previous record set in June.
Over the first eight months of the year, China’s surplus with its largest export market has risen nearly 15%, adding to tensions in the trade relationship between the world’s two largest economies.
China’s annual export growth in August moderated slightly to 9.8%, the data showed, the weakest rate since March but only slightly below recent trends.
The number missed analysts’ forecasts that shipments from the world’s largest exporter would rise 10.1%, slowing only slightly from 12.2% in July.
Even with US tariffs targeting $50 billion of Chinese exports in effect for their first full month in August, China’s exports to the United States still accelerated, growing 13.2% from a year earlier from 11.2% in July.
“There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the US economy,” said Zhang Yi, an economist at Zhonghai Shengrong Capital Management.
Zhang said the impact from US tariffs on China’s exports would likely be limited over the next few months.
China’s imports from the United States grew only 2.7% in August, a slowdown from 11.1% in July.
The world’s largest trading nation got off to a strong start this year, but its economic outlook is being clouded by the rapidly escalating US trade dispute and cooling domestic demand.
Trump upped the ante on Friday, warning he was ready to slap tariffs on nearly all Chinese imports to the United States, threatening duties on another $267 billion of goods on top of $200 billion in imports primed for levies in coming days.
Washington has long criticised China’s huge trade surplus with the United States and has demanded Beijing reduce it. Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over limits on US firms’ access to Chinese markets, intellectual property protection, technology transfers and investment.
Imports, a key gauge of the strength of China’s domestic demand, grew 20%, beating forecasts. Analysts had expected growth of 18.7%, slowing from July’s surprisingly high 27.3%.
That resulted in China posting a smaller overall trade surplus of $27.91 billion for the month. Analysts had expected the surplus would rise to $31.79 billion from $28.05 billion in July.
The surplus with the United States was larger than China’s net surplus for the month, indicating China would be running a deficit if trade with the world’s largest economy was excluded.
While no one predicted a sudden, sharp blow from US tariffs, China’s official export data has been surprisingly resilient so far, with growth exceeding analysts’ expectations for five months in a row.
Chinese officials acknowledged Chinese exporters have been rushing out shipments to beat new US tariffs, buoying the headline growth readings, while some companies such as steel mills are diversifying and selling more products to other countries.
Economists have noted that disruptions in supply chains are likely to be more company specific, and will take time to be reflected in broad economic data and corporate earnings reports. However, anecdotal evidence of mounting trade damage on both sides of the Pacific is on the rise.
Official and private manufacturing surveys for China show global demand for Chinese goods is clearly on the wane, with export orders shrinking for months in a row.
“Risks have increased due to the negative impacts of China-US trade friction. The impact on exports may gradually start to show up, with future export growth possible declining,” said Liu Xuezhi, an analyst with Bank of Communications.
Policymakers have shifted their focus in recent months to improving credit conditions and shoring up business confidence.
Beijing is ramping up spending on infrastructure projects to spur domestic demand and the central bank is tamping down borrowing costs and leaning on commercial banks to continue lending to struggling firms hit by trade troubles.
But such steps will take time to arrest the economy’s slide, and analysts expect the government to unveil more stimulus measures if business conditions continue to deteriorate.