|Image copyright GETTY IMAGES Image captionThe Trump administration now appears to be escalating trade tensions with Beijing|
On again, off again. The Trump administration seems to have a knack for keeping everyone guessing - not just on the North Korean summit - but also on trade.
So, is the US-China trade war back on?
Trade talks versus trade wars
Just a week after it looked like the US and China had agreed to put their trade war on hold, Washington now appears to be escalating trade tensions with Beijing. Analysts say this move could cast a shadow over the potential success of talks between the US and China in Beijing over the next couple of days … for more, go to https://www.bbc.com/news/business-44311522
KUALA LUMPUR (June 2018): Just when you think the global economy is safe from turbulence, Trump has, again, trumped up the world economic order.
President Donald Trump moved the US to the brink of a trade war with China, announcing tariffs on US$50 billion in Chinese imports.
And, US stock futures declined, and haven assets such as the yen and Treasuries rallied after the announcement.
And the full brunt of the trade war is set to escalate with China’s retaliation - China's Commerce Ministry said it planned to impose tariff measures of similar size and intensity, targeting US$50 billion in U.S. goods, including soybeans, aircraft, and autos and chemicals.
Beijing is also mulling to impose levy tariffs on imports of U.S. crude oil, natural gas and other energy products, just as China has risen to the top of the list of importers of oil from the United States.
The US-China trade war was ignited by Trump and only he can stop it by reversing all his tariff and sanction.
The tariff-sanction slapping Trump has, to date, ignored the feedback of Americans that the double-edge tariff is also hurting US businesses and investors, both domestic and foreign.
Here are the four latest US-China trade war news reports by Bloomberg and Reuters:
"Trump’s China tariffs met with retaliation threats from Beijing
| June 15, 2018
China will impose tariffs with "equal scale, equal intensity" on imports from the US and all the consensus the two sides reached earlier will lose effect, the Commerce Ministry said in a statement.
|US stock futures declined, and haven assets such as the yen and Treasuries rallied after the announcement. (Bloomberg pic)|
WASHINGTON: President Donald Trump moved the US to the brink of a trade war with China, announcing tariffs on $50 billion in Chinese imports that America’s biggest trading partner vowed to retaliate against.
The response from China signaled a rapid escalation of the dispute. China will impose tariffs with “equal scale, equal intensity” on imports from the US and all the consensus the two sides reached earlier will lose effect, the Commerce Ministry said in a statement on its website late Friday that was later removed. In an emailed statement, Trump pledged additional tariffs if China follows through on the retaliation threats.
The first wave of tariffs will total $34 billion and take effect July 6, with another $16 billion still to be reviewed, the US Trade Representative said in a separate statement. The USTR’s final list includes 1,102 product lines including robotics, aerospace, industrial machinery and automobiles. Not included are consumer goods including mobile phones and televisions.
“The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices,” Trump said.
US stock futures declined, and haven assets such as the yen and Treasuries rallied after the announcement. The yen strengthened 0.1% to 110.46 against the US dollar, while benchmark 10-year Treasury yields dropped roughly 3 basis points to 2.9077% as of 8:41 am in New York.
Criticism from the American business community came swiftly.
“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers. This is not the right approach,” Thomas Donohue, president of the US Chamber of Commerce, said in an emailed statement.
China, the world’s No. 2 economy behind the US, has pledged to retaliate on US exports including soybeans and pork. The US imported $505 billion of goods from China last year and exported about $130 billion, leaving a 2017 deficit of $376 billion, according to government figures.
Trump has frequently cited such an imbalance as the justification for a punitive trade policy toward China, Canada, Mexico, the European Union and other trading partners.
“These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” the president said in his statement Friday. “In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China.”
The move is a response to the USTR’s so-called Section 301 investigation earlier this year that accused China of stealing US intellectual property in an effort to dominate the development of advanced technology.
Trump is shaking up the world economic order with his zeal for tariffs and embrace of trade conflict. He threw a meeting of the Group of Seven into turmoil by revoking support for the group’s joint statement and berating the summit’s host, Canadian Prime Minister Justin Trudeau.
So far, the US has imposed tariffs on steel and aluminum imports. Economists expect the direct impact on the US economy to be modest. But if the president follows through on all the duties he’s threatened, including the tariffs against China, US inflation could accelerate by 15 basis points, according to Goldman Sachs.
Trump’s tariffs may also influence his efforts to bring peace to the Korean peninsula. Beijing is an important player in talks with North Korea on abandoning its nuclear-weapons program.
The president has been under pressure from U.S. lawmakers over his decision to soften a penalty on Chinese telecom-equipment maker ZTE Corp. In April, the US banned the ZTE from buying American technology for seven years, effectively putting the company out of business. But Trump said this month ZTE could avoid the ban if it paid at least $1 billion in penalties, among other things. US senators are seeking ways to block the deal in Congress. - Bloomber/Free Malaysia Today
Trump sets $50 bln in China tariffs with Beijing ready to strike back
Friday, 15 Jun 2018
9:17 PM MYT
Trump, whose hardline stance on trade has seen him wrangle with allies, said in a statement that a 25 percent tariff would be imposed on a list of strategically important imports from China. He also vowed further measures if Beijing struck back.
"The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against American exporters or American companies operating in China," Trump said in a statement.
Earlier on Friday, China vowed to do just that, saying it would strike back, just hours before Trump's statement. Trump has already said the United States would hit another $100 billion of Chinese imports if Beijing retaliated.
Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.
"If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights," Chinese Foreign Ministry spokesman Geng Shuang told a regular daily news briefing.
Trump's initial list included 818 products worth $34 billion in Chinese goods. The remainder of the $50 billion is still to be decided.
Trump has triggered a trade war with Canada, Mexico and the European Union over steel and aluminium and has threatened to impose duties on European cars.
Washington has completed a second list of possible tariffs on another $100 billion in Chinese goods, in the expectation that China will respond to the initial U.S. tariff list in kind, sources told Reuters.
China has published its own list of threatened tariffs on $50 billion in U.S. goods, including soybeans, aircraft, and autos, and has said it would hit back if Washington followed up with further measures.
Beijing and Washington have held three rounds of high-level talks since early May that have yet to yield a compromise. Trump has been unmoved by a Chinese offer to buy an additional $70 billion worth of U.S. farm and energy products and other goods, according to people familiar with the matter.
"The threshold to come to a consensus or a compromise seems high," Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management wrote in a note.
Renewed worries about an escalating trade conflict sent shares in Chinese telecoms gear maker ZTE Corp tumbling on Friday. The company has lost 30 percent of its market value since resuming trade this week.
ZTE last week agreed to pay a $1 billion fine to the U.S. government to end a crippling supplier ban imposed after it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.
Trump's revised tariff list may exclude some consumer items from an earlier proposal to focus more on goods related to Beijing's "Made in China 2025" program, according to a Eurasia Group report.
'TRADE TENSIONS WILL BE LONG-LASTING'
The "Made in China 2025" initiative is aimed at accelerating China's prowess and narrowing its competitiveness gap with the United States and other industrial powers in key technologies such as robotics and semiconductors.
While China has in recent months made incremental market-opening reforms in industries for which critics in the foreign business community say they were already planned, it has shown no inclination to yield on its core industrial policies.
"U.S.-China trade tensions will be long-lasting," Yifan Hu, regional chief investment officer and chief China economist at UBS Wealth Management, told a briefing in Beijing.
"The trade skirmish is not just about the trade deficit and exchange rates, but about the rules of the game, market openness and intellectual property. It is also about values, governance and geopolitical disagreements," she said. - Reuters
Wall St heads lower on rising China trade tensions
Friday, 15 Jun 2018
9:37 PM MYT
NEW YORK: U.S. stocks fell on Friday after the United States announced tariffs on $50 billion worth of Chinese goods, spurring a promise of immediate and equivalent retaliation from Beijing.
President Donald Trump said in a statement that a 25 percent tariff would be imposed on an initial list of strategically important imports from China from July 6 and vowed further measures if Beijing struck back.
In response, China's Commerce Ministry said it planned to impose tariff measures of similar size and intensity. Beijing has published its own list that target $50 billion in U.S. goods, including soybeans, aircraft, and autos and chemicals.
Boeing, the single largest U.S. exporter to China, fell 1.7 percent, dragging the Dow lower for the fourth day in a row.
Construction equipment maker Caterpillar slipped 1.6 percent and agricultural trader Bunge dropped 3 percent.
Global financial markets have struggled since February in the face of signs Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.
"It has gotten investors nervous," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "It's going to probably mean a cautious and bumpy ride for the stock markets."
Investors are also weighing the impact of tightening monetary policy by central banks on the equities market.
The U.S. Federal Reserve increased its key interest rate for the second time this year on Wednesday and hinted at the possibility of two more hikes by the end of 2018.
The European Central Bank weighed in on Thursday to say it would end its bond-purchase program at year-end, even if any interest rate hike was still distant.
At 9:51 a.m. ET the Dow Jones Industrial Average was down 140.43 points, or 0.56 percent, at 25,034.88, the S&P 500 was down 10.06 points, or 0.36 percent, at 2,772.43 and the Nasdaq Composite was down 38.09 points, or 0.49 percent, at 7,722.95.
NXP Semiconductors rose 3.1 percent after a media report that Beijing had already approved Qualcomm Inc's proposed $44 billion acquisition of the chipmaker. Qualcomm was up 0.6 percent. Sources close to the talks have told Reuters that China is yet to approve the deal.
Adobe shares dropped 3.2 percent, the biggest percentage decliner on the S&P 500, after the company projected third-quarter revenue that fell slightly below estimates.
Declining issues outnumbered advancers for a 2.27-to-1 ratio on the NYSE and for a 1.90-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and two new lows, while the Nasdaq recorded 37 new highs and 16 new lows. - Reuters/The Star Online
China surprises with threat on US oil exports
OIL & GAS
Saturday, 16 Jun 2018
6:39 AM MYT
NEW YORK:聽Beijing surprised oil markets with threats to levy tariffs on imports of U.S. crude oil, natural gas and other energy products on Friday, just as China has risen to the top of the list of importers of oil from the United States.
China responded to US$50 billion in tariffs imposed by U.S. President Donald Trump with a similar amount of levies on a variety of U.S. goods. But China also said it would impose tariffs on U.S. energy products, which analysts considered a surprise as previous tariff threats had centred on agricultural goods and automobiles.
"This is a big deal. China is essentially the largest customer for U.S. crude now, and so for crude it's an issue, let alone when you involve (refined) products, too. This is obviously a big development," said Matt Smith, director of commodity research at ClipperData.
China currently imports about 363,000 barrels of U.S. crude daily, on par with Canada as the biggest U.S. crude importer, according to U.S. Energy Department figures. It also takes in an additional 200,000 barrels a day (bpd) of other products like propane.
The U.S. energy industry has been buoyed by production from the nation's shale fields, boosting overall daily oil production to a record 10.9 million bpd. Of that, the United States is now exporting about 2 million bpd, and Trump has touted dominance in energy production and export as key to American global influence.
The United States has also been urging other nations, including China, to buy more U.S. energy and limit purchases of Iranian crude after Trump pulled out of a 2015 nuclear arms agreement with Tehran. China is the largest buyer of Iranian oil, purchasing 650,000 bpd in the first quarter of 2018, and it is unclear if it plans to reduce those purchases.
A tariff would discourage Chinese refiners from buying U.S. crude imports.
The threatened tariff by China comes just as major producers including Saudi Arabia and Russia look set to increase production at next week's meeting of the Organization of Petroleum Exporting Countries, along with other non-member states.
China is also a major importer of other products such as propane, and tariffs would boost prices for that and several other petroleum products, said Bernadette Johnson, vice president at Drillinginfo in Denver. She also said sellers of liquefied natural gas (LNG), also emerging as a U.S. export to China, have been worried about tariffs.
"The constant back-and-forth about the tariffs creates a lot of market uncertainty that makes it harder to sell cargoes or sign long-term (trade) deals," she said. - Reuters/The Star Online”
|Fred Dufour | AFP | Getty Images|
China's President Xi Jinping (L) and US President Donald Trump. As the world's two superpowers inch closer to a trade war, market experts are asking if this is a game the United States can win.
Why China 'holds all the aces' in a full-blown US-China trade war
· The Trump administration announced on Friday it will impose a 25 percent tariff on up to $50 billion in Chinese goods in an effort to protect U.S. intellectual property and technology.
· China in retaliation said it will introduce taxation measures of the same scale and strength.
· The objective is to reduce the size of the U.S.--China trade deficit from an estimated $370 billion to $200 billion by 2020.
· The administration says these alleged IP appropriations along with corporate espionage have cost the U.S. economy between $225 to $600 billion a year.
· While this may hurt China in the short-term, it has other markets to sell to in Asia and elsewhere … for more, go to https://www.cnbc.com/2018/06/15/why-china-holds-all-the-aces-in-a-full-blown-us-china-trade-war.html