Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Trump Shows He's Ready to Go All-In Against China on Tariffs

Published 09/07/2018, 03:59 PM
Updated 09/07/2018, 04:20 PM
© Bloomberg. The APL Danube container ship approaches the Port of Los Angeles in Los Angeles, California, U.S., on Wednesday, March 28, 2018. Long-only exchange-traded funds (ETFs) linked to broad baskets of energy, metals and agricultural products attracted $2.66 billion this quarter, Bloomberg Intelligence estimates show. While that's the largest quarterly inflow in data going back to 2005, the stream of money slowed in March as the U.S.-China trade row clouded the outlook for economic growth. Photographer: Patrick T. Fallon/Bloomberg

© Bloomberg. The APL Danube container ship approaches the Port of Los Angeles in Los Angeles, California, U.S., on Wednesday, March 28, 2018. Long-only exchange-traded funds (ETFs) linked to broad baskets of energy, metals and agricultural products attracted $2.66 billion this quarter, Bloomberg Intelligence estimates show. While that's the largest quarterly inflow in data going back to 2005, the stream of money slowed in March as the U.S.-China trade row clouded the outlook for economic growth. Photographer: Patrick T. Fallon/Bloomberg

(Bloomberg) -- President Donald Trump is raising the stakes in his gamble that the world will line up behind the U.S. to take on China over trade.

Trump said Friday he’s willing to slap tariffs on an additional $267 billion in Chinese goods, on top of duties of $200 billion in imports is already considering. The administration will act on the $200 billion “very soon depending on what happens,” Trump told reporters on Air Force One. “I hate to do this, but behind that there is another $267 billion ready to go on short notice if I want.”

If the president follows through, the threatened tariffs and those already in place would more than cover the value of all goods the U.S. buys from China, according to U.S. government data from last year. The U.S. imported $505 billion of Chinese products in 2017, Census Bureau figures show.

For the Trump administration, Friday began with sunny signs for the labor market before Trump’s hawkish trade-war rhetoric clouded the outlook. U.S. stocks erased gains after his trade-war rhetoric and headed for their first weekly decline in a month. The S&P 500 Index fell by 0.1 percent to the lowest in two weeks by 3:30 p.m. in New York.

“I don’t think this magnitude of tariffs has been priced into the markets,” Lara Rhame, chief U.S. economist at FS Investments, told Bloomberg Television in an interview. The strong performance of markets over the past few months “keeps getting disrupted by news on trade. It’s just another indication we’re not out of the woods yet,” she said.

Signs have been growing in recent weeks that Trump wants to focus his ire on China, which he has repeatedly accused of trading unfairly. The U.S. and European Union announced a trade truce in July, promising not to impose new tariffs on each other. Meanwhile, the administration has reached a preliminary deal with Mexico to overhaul the North American Free Trade Agreement, and has been negotiating around the clock with Canada for a new three-nation pact. The president earlier this week signaled an agreement with South Korea was close to finished.

White House economic adviser Larry Kudlow said Friday the U.S. wants to build a “coalition of the willing” to take on China that would include the EU, Japan and other allies. “The Chinese, you know, may find themselves more isolated if they don’t come into the global process,” Kudlow said in an interview with CNBC.

In a separate interview with Bloomberg Television, Kudlow suggested the president would be willing to meet with Chinese President Xi Jinping on trade, possibly as early as this month at the United Nations General Assembly. Kudlow’s comments indicated the U.S. is looking for a deal with China to end the trade war between the world’s two biggest economies.

But the president struck a harsher tone toward U.S. allies. Japan will have a “big problem” if it doesn’t conclude a new trade deal with the U.S., he said on Air Force One. “People have been saying, ‘I’m too tough on Canada,’” he said. “Look, Canada has been ripping us off for a long time. Now, they’ve got to treat us fairly.” Trump also on Friday reiterated threats to slap tariffs on auto imports, saying a tax on cars would be the “ruination” of some countries, including Canada.

U.S. businesses are warning that Trump’s trade gambit will inflict damage at home.

Apple Inc (NASDAQ:AAPL). noted in a letter that the government’s proposed tariffs on $200 billion cover a wide range of products used in its U.S. operations, including the Apple Watch. The disclosure prompted its shares to turn negative.

Levying duties on all Chinese purchases would hit “every aspect of our American lifestyle -- so the clothes that we put on our back, the food that we eat, the cars that we drive, theshoes that we wear,” Hun Quach, vice president of international trade for the Retail Industry Leaders Association, said by phone.

More blunt about the impact was Matt Priest, president and chief executive officer of the Footwear Distributors and Retailers of America: “In one word, disaster. Punishing my children for the crimes of my neighbors seems like a ridiculous thing for all of us to think it would be effective.”

China’s Retaliation

The U.S. has already slapped duties on $50 billion of Chinese imports since July, which spurred immediate in-kind retaliation from Beijing. China has said it would be forced to retaliate to all of the U.S.’s tariff measures, fanning concerns that a deepening trade war could dent the global economic outlook.

Some industry groups are reaching deep into their tool kits to block the tariffs. The administration’s proposed tariffs on $200 billion in Chinese goods may be vulnerable to legal challenge because they’re retaliatory in nature, rather than being a response to unfair business practices, the Consumer Technology Association said Friday.

While a case likely could be brought, legal challenges to such actions have not had much success, said David Gantz, who teaches trade law at the University of Arizona. Given the president’s broad authority under the trade act, Trump also could argue that the $200 billion, like the earlier tariffs, is really all part of the same enforcement package, Gantz said in an email.

© Bloomberg. The APL Danube container ship approaches the Port of Los Angeles in Los Angeles, California, U.S., on Wednesday, March 28, 2018. Long-only exchange-traded funds (ETFs) linked to broad baskets of energy, metals and agricultural products attracted $2.66 billion this quarter, Bloomberg Intelligence estimates show. While that's the largest quarterly inflow in data going back to 2005, the stream of money slowed in March as the U.S.-China trade row clouded the outlook for economic growth. Photographer: Patrick T. Fallon/Bloomberg

Latest comments

Trump, the Genius. Hehehe
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.