US Axes Tariffs On Chinese Goods In Trade War Thaw

 

The United States and China announced a major thaw in their trade war Friday, including immediate cuts to punishing import tariffs, but markets were not impressed.

“We have agreed to a very large Phase One Deal with China,” President Donald Trump tweeted after officials in Beijing made a similar announcement.

A signing of the deal at ministerial level is expected for “the first week of January,” a senior Trump administration official told reporters.

The news is a boon for Trump who faces a congressional vote on impeachment for abuse of office next week. With his 2020 reelection campaign gathering pace, he needs to show voters that his habit of starting bruising trade wars is bearing fruit.

So after multiple false dawns in the tussle between the world’s top two economies, which Trump launched in March 2018, investors were relieved to see him cancel a new round of tariffs due to kick in on Sunday.

Those levies, which would have hit consumer electronics like cell phones and computers, “will not be charged because of the fact that we made the deal,” Trump tweeted.

In a major concession, Washington will also slash in half the 15 percent tariffs imposed on $120 billion in Chinese goods, like clothing, that were imposed September 1 and had a bigger impact on American shoppers than previous rounds.

But Trump said existing tariffs of 25 percent on $250 billion of Chinese imports would stay in place pending further negotiations on a second phase deal.

In return, US officials say, China is committing to increasing purchases in four sectors: agriculture, manufacturing, energy, and services.

Purchases will hit “at least $200 billion dollars over the next two years,” the administration official explained, on condition of anonymity.

In addition, the official said, China is agreeing to start structural reforms, including on the key problem of intellectual property rights.

Reprieve for US Farmers

American farmers who bore the brunt of the trade war and retaliation by Beijing which slashed exports, will especially benefit from the increased purchases, US officials say.

“I think in agriculture they will hit $50 billion,” and take effect “pretty soon,” Trump told reporters at the White House.

Meanwhile, China’s Vice Finance Minister Liao Min told reporters that Beijing would also call off retaliatory tariffs planned to respond to Sunday’s now scrapped US measures.

Vice Commerce Minister Wang Shouwen said the initial agreement includes strengthening protection of intellectual property rights, expanding market access and safeguarding rights of foreign companies — issues at the heart of US complaints.

“It is hoped that both sides will abide by the agreement, work hard to implement the relevant contents of the first phase of the agreement.”

The US official told reporters that Washington is satisfied it can enforce the deal, “potentially in the form of tariffs.”

Skepticism is High

Though investors were relieved to see Sunday’s threatened tariffs removed, US stock markets didn’t appear to like the deal much.

Trade economist Mary Lovely said the deal could only be viewed as a “partial win” which “didn’t move the needle very much.”

The gains do not compensate for the damage to US farmers and businesses, she told reporters.

“President Trump is desperately trying to get back to where the economy was 18 months ago,” before taking this “unilateral, brute force approach,” Lovely said.

In a sign that tensions remain high, Foreign Minister Wang Yi said earlier Washington was “suppressing” China in a number of fields, including the economy, trade and technology and had “seriously damaged the foundation of hard-earned trust between China and the US.”

Washington has also angered Beijing by backing Hong Kong’s pro-democracy movement and criticizing China’s mass detention of mostly Muslim minorities in the northwest region of Xinjiang.

US, China Working To Delay December 15 Tariffs – Report

This photo taken on August 7, 2018 shows workers unloading bags of chemicals at a port in Zhangjiagang in China’s eastern Jiangsu province.  Johannes EISELE / AFP

 

US and Chinese officials are working on a deal to postpone a round of tariffs set to hit Chinese imports in five days, according to a media report on Tuesday.

Delaying the new duties, which cover about $160 billion in imports, including consumer favorites like mobile phones, could help reassure markets the two sides are making progress towards ending their trade war.

Officials on both sides say they now expect to continue talking past December 15, when the tariffs are due to kick in, according to The Wall Street Journal.

The report helped move Wall Street futures into positive territory.

US officials have reiterated that any final decision by the American camp belongs to President Donald Trump.

For two months, the two sides have struggled to finalize a partial deal that Trump announced in October.

Should the December 15 tariffs take effect, virtually all the merchandise the United States imports annually from China will be covered by punitive tariffs.

AFP

Trump On Complete Rollback China Tariffs: ‘I Won’t Do It’

(FILES) In this file photo taken on October 25, 2019 US President Donald Trump speaks to the press before departing the White House in Washington, DC. 
NICHOLAS KAMM / AFP

 

President Donald Trump said Friday he will not remove all the existing tariffs imposed on Chinese goods as part of a deal to resolve the longstanding trade war.

“I won’t do it,” he told reporters at the White House when asked about a complete rollback of tariffs he imposed on almost $400 billion in Chinese goods to date.

Trump also said the initial deal will be signed “in our country,” possibly in Iowa.

Investors worldwide have been cheered in recent days by reports quoting sources in Washington and Beijing saying duties already imposed could be removed in a proportional way.

China Seeks WTO Nod For $2.4bn Tariffs On US Goods

 

China will ask the World Trade Organization for permission to impose tariffs on $2.4 billion worth of US goods as compensation in a dispute that dates back to 2012, documents showed Monday. 

In a statement circulated to WTO members last week, but sent to journalists on Monday, China claimed the penalty was justified given the “United States continued non-compliance” with previous WTO rulings.

The move comes as the world’s two largest economies continue to seek a deal to resolve a trade war that has seen billions of dollars in tit-for-tat tariffs imposed by both sides.

But the case was initiated in 2012 after former US president Barack Obama’s administration slapped duties on Chinese products ranging from thermal paper to solar panels and drill pipe.

The Obama administration argued that the duties were necessary to counter Chinese dumping of low cost goods into the US, unfairly harming American producers.

China took the case to the WTO’s Dispute Settlement Body (DSB), arguing the US counter-measures breached international trade rules, ultimately winning a partial victory.

The case wound its way for several years through the WTO’s complex dispute settlement in process.

In March 2018, WTO judges found the US had failed to comply with earlier rulings and that Washington was still applying illegal duties.

China will formally ask the DSB to approve the tariffs at a meeting next week, but the US will have the right to object.

That would automatically refer the case to an arbitrator, who could take more than a year to issue a decision.

AFP

Airbus Tariffs: EU Warns US Of Retaliation

The European Union warned Washington on Wednesday that the bloc will retaliate if the US slaps tariffs on $7.5 billion of EU goods as an epic Airbus-Boeing row heated up.

“If the US decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same,” the EU said in a statement.

It stressed that “our readiness to find a fair settlement remains unchanged,” after the long awaited ruling by the World Trade Organization to authorise the tariffs on $7.5 billion of EU goods was published.

AFP

Asian Markets Fall Amid US-China Tariffs

A Investor (not shown) looks at screens showing stock market movements at a securities company in Beijing on August 26, 2019.  WANG Zhao / AFP

 

Most Asian markets fell on Monday as fresh Chinese and US tariffs on goods worth hundreds of billions of dollars kicked in, though Donald Trump reiterated that the two sides were still due to hold talks this month.

Hong Kong was weighed down by another weekend of violence, fuelling worries about possible Chinese intervention in the financial hub, while the unrest has also hit property firms and Macau’s casinos.

Washington’s latest levies on imports from China took effect on Sunday and were followed by Beijing’s retaliation.

The measures are the latest in the long-running trade war between the world’s top two economies, which has rattled markets and hit growth across the globe.

READ ALSO: Hong Kong Students Defy China With Boycott

Still, Trump said negotiators would meet this month to discuss the issue. “We are talking to China, the meeting is still on,” he told reporters.

However, analysts warned there was unlikely to be any end in the near term.

“After a rough August traders should buckle up for more volatility in September,” said Neil Wilson, chief market analyst at Markets.com. “Trade and tariffs continue to gnaw away at investor confidence.”

Tokyo and Sydney each ended 0.4 percent lower, while Singapore shed 0.8 percent, with Manila, Bangkok and Jakarta also down.

But Shanghai rose more than one percent after a better-than-expected reading on Chinese factory activity, though another index showed the sector remained in contraction and investors remain uncertain about the outlook as the trade war bites deeper. There were also gains in Seoul, Wellington and Taipei.

Violence grips Hong Kong 

Hong Kong sank 0.4 percent after a weekend that saw some of the worst violence since protests began three months ago, with the airport targeted again, and demonstrators have called for a general strike on Monday though there was little sign that had been heeded.

The unrest has dragged a range of sectors, with tumbling tourist numbers hitting casinos and hotel chains, while real estate shares are also being sold off.

“Markets are fretting on the increased likelihood of direct Chinese intervention and what that would mean for the future of one of Asia’s leading financial centres,” said Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA.

“The answer is, not good, to put it bluntly. The economic impact will surely show in Hong Kong data going forward and may temper the mood of equity traders in Asia as the new month begins.”

Oil prices were mixed after Friday’s steep losses owing to worries about the impact of the trade war on demand, while dealers were also concerned about reports that the Russian output cut last month fell short of an agreement with OPEC.

“A fissure is forming in OPEC+ compliance, which saw oil prices crater,” said Stephen Innes, APAC Market Strategist at AxiTrader.

“On the surface, while it is not likely a significant divergence, it’s the messaging that Russia is sending that spooks markets. While it could be little more than a tempest in an oil can at this stage, it’s worth monitoring nonetheless.”

Investors will be keeping an eye on markets in Argentina later in the day after the government imposed foreign-exchange controls on exporters following a week that saw a sharp drop in the peso.

In early trade London rose 0.5 percent, with traders bracing for a tough week in Westminster as Prime Minister Boris Johnson faces opposition from MPs across the political spectrum who have vowed legislation blocking a no-deal Brexit.

Also, EU negotiator Michel Barnier said the bloc will not change the divorce deal agreed with former PM Theresa May, fuelling expectations Britain will crash out with no agreement in place.

Paris and Frankfurt were both 0.1 percent higher.

 Key figures around 0810 GMT 

Tokyo – Nikkei 225: DOWN 0.4 percent at 20,620.19 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 25,626.55 (close)

Shanghai – Composite: UP 1.3 percent at 2,924.11 (close)

London – FTSE 100: UP 0.5 percent at 7,240.73

Pound/dollar: DOWN at $1.2145 from $1.2162 at 2100 GMT

Euro/dollar: DOWN at $1.0981 from $1.0992

Dollar/yen: DOWN at 106.25 yen from 106.26 yen

Euro/pound: UP at 90.42 pence from 90.37 pence

West Texas Intermediate: UP five cents at $55,15 per barrel

Brent North Sea crude: DOWN four cents at $59.21 per barrel (new contract)

New York – Dow: UP 0.2 percent at 26,403.28 (close)

AFP

IMF Warns Trump Against US Tariffs On China

 

US tariffs on China won’t fix the trade deficit, and neither will weakening the US dollar through interest rate cuts, International Monetary Fund economists said Wednesday.

In unusually blunt language, the blog post seemed targeted straight at President Donald Trump who has persistently demanded that the Federal Reserve cut interest rates to weaken the US dollar and juice the economy while imposing round after round of tariffs on China to reduce deficit he describes as theft.

But the US policy moves are counterproductive, won’t achieve the desired results, and will slow the global economy, IMF chief economist Gita Gopinath said.

“Higher bilateral tariffs are unlikely to reduce aggregate trade imbalances, as they mainly divert trade to other countries,” Gopinath warned in a blog titled “Taming the Currency Hype,” co-authored by fellow IMF researchers Gustavo Adler and Luis Cubeddu.

“Instead, they are likely to harm both domestic and global growth by sapping business confidence and investment and disrupting global supply chains, while raising costs for producers and consumers.”

And any plans to weaken a country’s own currency value “are cumbersome to implement and likely to be ineffective,” they said, adding that pressure on the central bank will not achieve that goal either.

The authors warned that “one should not put too much stock in the view that easing monetary policy can weaken a country’s currency enough to bring a lasting improvement in its trade balance.”

“Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result … especially within a 12-month period,” they said.

With the US presidential election coming in November 2020, Trump is especially focused on the next 12 months.

 ‘Bearing the burden’ 

Trump has slapped steep tariffs on $250 billion in Chinese, goods with the remaining $300 billion in imports targeted for new duties in two more rounds, September 1 and December 15.

With the IMF and others alerting that his trade war is slowing global growth, and as warning signs of a US recession have flashed red, Trump has doubled down on his attacks on the Federal Reserve and on China.

He and his advisors have been talking up the economy to counteract the increasing jitters on US financial markets.

At the same time, Trump has maintained his relentless attacks on the Fed, blaming Fed Chair Jerome Powell for failing to allow the economy to grow and for the strong US dollar.

In yet another Twitter outburst on Wednesday, Trump said of Powell, “Big U.S. growth if he does the right thing, BIG CUT – but don’t count on him! So far he has called it wrong, and only let us down.”

“Yesterday, ‘highest Dollar in U.S.History.’ No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!”

Just last month, the IMF again downgraded its global growth forecast and said the trade tensions make for a “precarious” 2020, in which tariffs threaten to exacerbate the slowdown of China’s economy.

The IMF blog repeats much information released in separate reports, but highlights the key points and brings them together.

While economic theory states that a weaker currency tends to make a country’s exports cheaper and more competitive, the IMF notes that many products are priced in US dollars on the global marketplace.

So in reality, it argued, “US importers and consumers are bearing the burden of the tariffs. The reason: the stronger US currency has had a minimal impact thus far on the dollar prices Chinese exporters receive because of dollar invoicing.”

AFP

Trump To Hit China With $300bn Punitive Tariffs In Goods

Trump To Hit China With $300bn Punitive Tariffs In Goods
(File) US President Donald Trump speaks to the media as he walks to Marine One prior to departing from the South Lawn of the White House in Washington, DC, July 5, 2019. SAUL LOEB / AFP

 

 

US President Donald Trump announced Thursday he will hit China with punitive tariffs on another $300 billion in goods, prompting Beijing to warn it was the wrong way to resolve the trade war.

Trump’s move jolted US and Asian stock markets and came just a day after US and Chinese trade negotiators revived talks aimed at ending the year-long dispute.

The announcement means virtually all of the $660 billion in annual trade between the world’s two biggest economies will have tariffs on it.

READ ALSO: China Threatens ‘Countermeasures’ If US Imposes New Tariffs

The 10 percent duties will take effect September 1, and come on top of the 25 percent tariffs on $250 billion in imports already in place.

Trump later raised the possibility he could increase the duties further.

“The 10 percent is… for a short-term period and then I can always do much more or I can do less, depending on what happens with respect to a deal,” he said at the White House, adding, “it could be lifted up to well beyond 25 percent.”

After resuming face-to-face talks in Shanghai this week, trade negotiators were set to reconvene in Washington in early September for another round of discussions, which means they will take place just after the new tariffs take effect.

“Slapping on tariffs is definitely not a constructive way to resolve economic and trade frictions, it’s not the correct way,” Chinese Foreign Minister Wang Yi said in brief remarks on the sidelines of a regional meeting of top diplomats in Bangkok on Friday.

China has yet to say whether and how it will retaliate, but it has hinted in recent months that it could restrict exports of rare earths, which are vital to the US tech industry, and it is also working on a blacklist of “unreliable” companies that could target US firms.

– ‘Predatory tactics’ –

When he announced the tariffs on Twitter, Trump said Beijing had agreed “to buy agricultural product from the US in large quantities but did not do so.”

Just hours earlier, China had said it had started to make more purchases of US farm goods.

“Additionally, my friend President Xi said that he would stop the sale of fentanyl to the United States — this never happened, and many Americans continue to die!” Trump said, referring to the highly potent and addictive opioid.

US Secretary of State Mike Pompeo directed more criticism at China at the meeting of Southeast Asian nations that Wang also attended in Bangkok.

“China has taken advantage of trade… It’s time for that to stop,” Pompeo said, accusing Beijing of “protectionism” and “predatory tactics” to give its companies an advantage in global markets.

Washington has accused China of using a state-directed economic model, unfairly subsidising production and stealing US technology.

Trade relations with China have swung between progress and disaster, appearing to collapse in May only to be revived two months later after a meeting in Japan between Trump and Chinese President Xi Jinping.

The leaders declared a truce at that meeting in late June, but the new tariffs make good on a threat Trump made in May.

“The core motivation is the talks clearly weren’t going to go anywhere without more pressure on the Chinese,” said Derek Scissors, an expert on US-China economic ties at the American Enterprise Institute, a conservative think tank.

“Of course, they could react badly now and the talks could end entirely. It’s a measured risk,” he told AFP.

– ‘Not concerned’ –

In prior tariff rounds, US officials had worked to prevent the higher costs from hitting popular consumer items.

But the new duties, coming just before the holiday shopping season, will cover the vast expanse of everyday Chinese-made goods and consumer electronics — smartphones, baby carriages, tampons, watches, and toys.

Trump has falsely claimed China pays for his mounting tariffs. But Democrats in Congress and business groups say the measures are taxing ordinary consumers and making household goods more expensive.

While other parts of the US economy have begun to slow, the dominant retail sector has been a bright spot, helping to bolster growth despite the general slowdown in most other industrialized nations.

Industries, as varied as fashion and oilfield services, had pleaded with the Trump administration to hold fire, warning of layoffs, lost markets, and fading industrial dominance.

Wall Street and Asian markets dove into the red following Trump’s announcement, with retailers hit particularly hard. The Dow Jones Industrial Average was closed down more than one percent.

Despite the red arrows on Wall Street, Trump remained upbeat.

“I’m not concerned about that at all,” he told reporters. “I expected that.”

AFP

Trump To Hike Tariffs On $200bn Of Chinese Goods

US President Donald Trump/ AFP

 

US President Donald Trump announced Sunday that the United States would raise tariffs on $200 billion of Chinese goods to 25 per cent this week because trade talks are moving “too slowly.”

Trump’s action came as a major Chinese delegation is expected to arrive Wednesday in Washington for the latest round of talks to end the trade war between the world’s two biggest economies — around billed as the last one and possibly leading to a deal to end the conflict.

“For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods,” Trump tweeted.

“The 10% will go up to 25% on Friday,” he said.

READ ALSO: At Least One Dead In Russian Plane Blaze

The two sides have imposed tariffs on $360 billion in two-way trade since last year. But Trump and Chinese leader Xi Jinping agreed to a truce in December to refrain from further escalation.

As recently as last week, the US had depicted the trade talks as going well.

“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump complained Sunday.

Trump says he wants to reduce the huge US trade deficit with China, which in 2018 totalled $378.73 billion if you include trade in services.

Besides a greater opening of the Chinese market to US goods, Trump is pressing for structural changes such as Beijing ending its practice of forcing US companies that operate in China to share their technology.

Trump is also demanding that China halt theft of intellectual property and subsidies to state-owned companies.

To pressure China, Trump has even threatened to slap tariffs on all Chinese products entering the US — they were worth $539.5 billion last year.

AFP

EU Threatens $12bn Tariffs Over US Boeing Subsidies

 

The EU on Wednesday unveiled a wide-ranging list of US-made goods, from beeswax to car parts, subject to tariffs in retaliation for subsidies to Boeing as a transatlantic trade war risked re-erupting.

“European companies must be able to compete on fair and equal terms… We must continue to defend a level-playing field for our industry,” said EU Trade Commissioner Cecilia Malmstrom in a statement.

READ ALSO: BMW To Recall 360,000 Cars In China Over Defective Airbags

Europe’s $12 billion claims against Boeing comes on the trail of a similar demand by the US for $11 billion in compensation for EU subsidies towards Airbus.

AFP

China Trade Talks To End March 1 – Trump

 

US President Donald Trump said Tuesday the talks to resolve the trade dispute with China had begun already and would last for 90 days unless they were extended.

The clock started ticking on December 1, when Trump met in Buenos Aires with China’s leader Xi Jinping and agreed to work towards an agreement to roll back the exchange of tariffs on hundreds of billions of dollars in two-way trade.

However, Trump held out the possibility of an extension.

“The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina,” Trump tweeted.

After the meeting, Washington agreed to hold off on Trump’s threat to raise tariffs on $200 billion in Chinese imports to 25 percent beginning January 1, leaving them at the current 10 percent rate.

In return, Washington said China would purchase “very substantial” amounts of US agricultural, energy, industrial and other products.

Trump on Sunday said China also would “reduce and remove” tariffs of 40 percent on cars, though Beijing has yet to confirm the move.

US Trade Representative Robert Lighthizer will lead the talks to see “whether or not a REAL deal with China is actually possible,” Trump tweeted on Tuesday. “China is supposed to start buying an Agricultural product and more immediately.”

American farmers have been hit hard by China’s retaliation on US farm goods, especially soybean exports, which have plummeted.

Trump warned that although he and Xi want to get to an agreement “remember, I am a Tariff Man.”

“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” he said.

In a subsequent tweet, Trump said he would “happily sign” a “fair deal” that addresses US concerns, should one be reached with Beijing.

AFP

China Sets Retaliatory Tariffs On $60bn In US Goods

FILE Photo of China Map

 

 

China Tuesday announced tariffs on US goods worth $60 billion in retaliation for President Donald Trump’s decision to slap duties on $200 billion in Chinese products next week.

Tariffs of between five and 10 percent will take effect on some 5,200 US products on Monday, on the same day as the new US duties, the finance ministry said.

The two side already traded tariff salvos on $50 billion in goods from each country in the summer.

“If the United States insists on raising tariffs, even more, China will respond accordingly,” the finance ministry said in a statement.

China had previously warned that it would target $60 billion in US goods if Trump made good on his threat to impose the new tariffs.

The lower Chinese figure highlights Beijing’s inability to match the US dollar-for-dollar in a tariffs war.

The US imported around $500 billion worth of products from China last year, compared to $130 billion in US goods imported by the Asian country.

Trump threatened to hit another $267 billion in Chinese goods if Beijing took retaliatory action.

The Chinese finance ministry did not provide a detailed list of products to be hit by the new tariffs on Monday.

A previous list said products ranging from pig hides to cocoa butter and condoms would be targeted.

China had previously said the $60 billion in US goods would face tariffs of five to 25 percent. It was unclear if the tariffs announced on Tuesday were lower to match the US plan.

The US said the Chinese imports will face 10 percent tariffs through the end of the year, and then the rate will jump to 25 percent.

AFP