Published: Tue, May 14, 2019
Markets | By Otis Pena

China Is Raising Tariffs on $60 Billion of US Goods

China Is Raising Tariffs on $60 Billion of US Goods

The US has a wider range of goods to tariff, thanks to China's protectionist policies at home, which has them at a disadvantage now.

The S&P 500 (SPX) fell 1.7% and the Nasdaq (COMP) dropped 2.1%.

The pan-European STOXX 600 index lost 1.21%. Trump tweeted, adding that tariffs can be avoided if manufacturers shift production from China to other countries.

The result has been a volatile week-long roller coaster with no end in sight.

"China will not only act as a kung fu master in response to US tricks, but also as an experienced boxer and can deliver a deadly punch at the end", Wei said.

Last Thursday morning the Dow skidded 580 points, only to regain almost 470 by close of trading on Friday.

The Dow Jones Industrial Average plunged more than 700 points Monday as investors sought shelter from an escalating trade war between the USA and China. In fact, US farm exports to China approached $26 billion in both 2012 and 2013 and came in at $19.5 billion in 2017 before his trade war began taking a toll on agricultural sales to China.

Chicken and turkey are also included in the new tariffs, but both those items already are banned in China because of a bird flu outbreak in 2015. Trump said repeatedly that China "broke the deal" the two sides had been working toward over the past several months. Even if they do not buy from China, they will buy from other countries, so the trade deficit will shift to other countries.

The president insisted increases on Chinese goods don't hurt American consumers, saying there is "no reason for the U.S. Consumer to pay the Tariffs".

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The Islamic extremists also have targeted foreigners, abducting and killing a Canadian geologist earlier this year. It follows a similar attack on a Christian church last month. "People are holed up in their homes".

The president said Monday that that's not inevitable. China's Finance Ministry announced duties of 5% to 25% due to take effect June 1 on about 5,200 American products, including batteries, spinach and coffee.

Investors piled into safe-haven assets, including U.S. Treasuries and the Japanese yen. It could soon hit all Chinese imports with 25% tariffs.

He added that USA consumers could avoid the tariffs by buying the same products from other sources.

The president started raising tariffs last July over complaints China steals or pressures foreign companies to hand over technology and unfairly subsidizes Chinese businesses that are striving to become global leaders in robotics and other technology.

"If the United States decides to immediately impose levies on the rest of the $325bn worth of Chinese goods, it would be a very bad scenario for the Chinese markets", said Target Capital's Chan. Chinese regulators have instead targeted American companies in China by slowing down the clearing of shipments through customs and the processing of business licenses.

Trump has railed against the Chinese since the middle of his 2016 presidential campaign, complaining about unfair trade practices that put Beijing at an advantage.

Fair point. Tariffs might be necessary at this point to force China into concessions, but they're not a good thing for American consumers or distributors in the short run.

Speaking several hours later at a dinner gathering at the White House, Trump said it should be clear in "three or four weeks" if a USA trade delegation's trip to Beijing two weeks ago was successful. After being pressed by Fox News Sunday anchor Chris Wallace, Kudlow said that "in fact, both sides will pay". And U.S. President Donald Trump said he was optimistic about resolving the trade dispute.

Fox News' Lou Dobbs doubled down in defense of President Donald Trump's repeated falsehood that Chinese exporters and manufacturers are paying the costs of the growing number of tariffs his administration has placed on goods from that country, instead of U.S. consumers and businesses.

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