Published: Sun, July 08, 2018
Global News | By Blake Casey

Tariffs could cause OH farmers' net income to drop 59 percent

Tariffs could cause OH farmers' net income to drop 59 percent

The total value of the USA tariffs on China amounts to $50bn, though they will come into effect in two tranches, with the first round covering 818 products worth about $34bn having come into force on Friday.

China's currency, the yuan, has dropped 3.5 percent against the dollar over the past month, giving Chinese companies a price edge over their US competition.

Shortly after the tariffs took effect, China said it is "forced to make a necessary counterattack" to a USA tariff hike on billions of dollars of Chinese goods but gave no immediate details of possible retaliation.

The row has caused turbulence on the world's stock markets and could hurt global trade and growth.

A spokesman for the ministry of commerce in Beijing said: "China promised not to fire the first shot, but in order to safeguard the country's core interests as well as that of the people, it is forced to fight back".

"If what the United States wants is to escalate a trade war with China, then so be it".

Friday's tariffs could just be the opening skirmishes in the war, as Trump has vowed to hit as much as $450 billion in Chinese goods, the vast majority of imports.

The long-threatened tariffs went into effect on Friday as months of dialogue between the world's two largest economies failed to reach a solution or lessen Washington's outrage over its current trade imbalance with the Asian giant.

Beijing slapped additional 25 percent tariffs on 545 US imports totaling $34 billion - including automobiles and agricultural products such as soy beans and beef - as part of a retaliatory plan involving 659 items worth $50 billion.

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As the trade war with China - caused by tariffs demanded by Donald Trump - heats up, the editors of the Wall Street Journal have taken the president to task, sarcastically mocking him as a "master negotiator" who has yet to negotiate any deals while causing damage to the USA economy. These tactics include cyber-theft and requiring American companies to hand over technology in exchange for access to China's market.

For the time being, analysts say it's hard to see Washington or Beijing backing down in the dispute. Trump has also repeatedly called out Canada's dairy policies as being unfair to US farmers, which could prove another issue in trade negotiations.

But that step raises costs for USA companies that rely on Chinese-made machinery or components. Given that the United States buys almost four times as much from China as it sells to them, China may have to seek avenues other than trade to retaliate if the battle escalates.

The White House said it would consult on tariffs on the other $US16b of products, and would apply these later.

The National Retail Federation: "With tariffs against China taking effect, American consumers are one step closer to feeling the full effects of a trade war", Matthew Shay, president and CEO of The National Retail Federation, said in a statement Friday. The dollar and Treasuries edged lower as traders looked ahead to the release of USA jobs data. China accounted for 80%, or nearly $1 billion of US exports a year ago.

If the USA and China don't solve the trade dispute that began Friday, American soybean farmers could need government aid by fall to ensure their businesses don't collapse, according to Iowa soybean farmer Ron Heck. When a government or economic bloc (such as the EU) imposes a tariff on a particular product, importers pay the levy as a percentage of the total value of the product to the customs agency of that country, at the point of entry.

Much depends on how President Trump and the communists in Beijing play the next round in the trade war game.

Global supply chains are now highly specialized and delicate, and disruption in one part of the production could imply a breakdown in the whole process, Hui said. So it is not hyperbolic to say that trade with China, and its effect on the labor force, helped elect Trump.

Many economists have voiced concerns that the U.S. Trump has threatened to hit back with vehicle tariffs of 20%, which would be highly damaging for the German auto industry.

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