Defiant Trump welcomes ‘easy to win’ trade war

Donald Trump’s latest tweets angered trading allies on Friday. (AP Photo)
Updated 02 March 2018
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Defiant Trump welcomes ‘easy to win’ trade war

WASHINGTON DC: US President Donald Trump yesterday welcomed the prospect of a trade war with other countries, remaining defiant in the face of the global uproar sparked by his sudden announcement of steel and aluminum tariffs.
With global stock markets tumbling and allies indignant, the president responded to the negative reaction by raising the stakes and vowing even more sweeping trade steps.
In a blistering series of morning tweets, he said he would impose “reciprocal taxes” on all imports from trading partners that have duties on American exports.
Such a move would expand the administration’s confrontational “America First” trade policy far beyond the hefty steel and aluminum tariffs he announced on Thursday — which come despite strenuous objections from stunned advisers and powerful industry groups.
The wide-ranging actions, if imposed, would eviscerate the rules-based global trading system and drastically raise the chances of a trade war.
But in an early morning tweet Trump seemed to welcome the prospect, saying trade wars were “good and easy to win.”
“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
Allowing imports into the US market duty free when similar exports face tariffs is “not fair or smart,” Trump said on Twitter.
“We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit-have no choice!“
He also defended his decision on Thursday to impose 25 percent tariffs on steel imports and 10 percent on aluminum.
“IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!” Trump said in another tweet on Friday.
Wall Street losses continued to mount on Friday’s opening, with all major global indices also in the red.
Senior officials were caught flat-footed by Trump’s announcement on Thursday, which comes at a period of low morale and turmoil for the embattled White House, which has suffered stinging reversals and high profile departures in recent days.
And economists say tariffs such as those Trump proposes will hurt the US companies and workers he has said he wants to protect. As the world’s largest steel importer, the move risks jacking up costs for crucial inputs for infrastructure and industries that are major employers.
An editorial in the conservative Wall Street Journal typified the dismay of industry advocates, calling the tariffs the “biggest policy blunder” of Trump’s young presidency and “self-inflicted folly.”
Trump’s most persistent trade adversary, China, on Friday called on the US to exercise “restraint,” warning that the US offensive could prompt reprisals and have “a serious impact” on the global trade order.
The European Commission vowed to “react firmly” while Canada and Germany each called the tariffs “unacceptable,” with Germany urging Trump to reconsider.
David Kotok, chief investor at the asset manager Cumberland Advisers, said Trump’s action endangered any economic benefits from December’s sweeping tax cuts and the current cycle of rising benchmark interest rates at the Federal Reserve.
“He is losing his staff. He is isolated and beleaguered,” Kotok said in a client briefing note.
“And in the midst of crisis he tosses an ill-thought-out bomb called protectionism that punches out the best of our allies and friends while it strengthens our nation’s adversaries.”
Trump’s decision — which leans on a rarely-used trade provision allowing protections for national security — could hit other countries far more than China, which is the world’s largest steel producer but accounts for less than 1 percent of US imports.
Major players in the US metals industry and their workers, who have long complained of dumping, overcapacity and subsidies by competing producers, would be the obvious beneficiaries.
But analysts say a far larger share of US industry and economic activity would be exposed to higher prices, weighing on growth and employment.
Recent official figures show about 140,000 Americans work in US steel mills, generating about $36 billion in economic activity, or about 0.2 percent of GDP.
But steel-consuming industries employ 6.5 million Americans and add about $1 trillion to GDP.
In 2002, then-President George W. Bush imposed steel tariffs that caused an estimated 200,000 in job losses and cost nearly $4 billion in lost wages. The administration backtracked a year later after it lost a dispute before the World Trade Organization.
According to NERA Economic Consulting, a 7 percent duty on aluminum alone would cost the manufacturing sector 3,040 jobs and $1.4 billion a year, while the economy overall would lose $5 billion and 22,600 jobs.
And analysts said the main fear is what happens as the situation escalates once other countries begin to react.
“We think overall, the danger is contagion — the reaction — rather than the actual tariffs themselves,” Fat Prophets resources analyst David Lennox told AFP.


‘Don’t be too optimistic’: Huawei employees fret at US ban

Updated 26 May 2019
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‘Don’t be too optimistic’: Huawei employees fret at US ban

  • This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei
  • Another critical partner, ARM Holdings, said it was complying with the US restrictions

BEIJING: While Huawei’s founder brushes aside a US ban against his company, the telecom giant’s employees have been less sanguine, confessing fears for their future in online chat rooms.
Huawei CEO Ren Zhengfei declared this week the company has a hoard of microchips and the ability to make its own in order to withstand a potentially crippling US ban on using American components and software in its products.
“If you really want to know what’s going on with us, you can visit our Xinsheng Community,” Ren told Chinese media, alluding to Huawei’s internal forum partially open to viewers outside the company.
But a peek into Xinsheng shows his words have not reassured everyone within the Shenzhen-based company.
“During difficult times, what should we do as individuals?” posted an employee under the handle Xiao Feng on Thursday.
“At home reduce your debts and maintain enough cash,” Xiao Feng wrote.
“Make a plan for your financial assets and don’t be overly optimistic about your remuneration and income.”
This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei as a result of the ban.
Another critical partner, ARM Holdings — a British designer of semiconductors owned by Japanese group Softbank — said it was complying with the US restrictions.
“On its own Huawei can’t resolve this problem, we need to seek support from government policy,” one unnamed employee wrote last week, in a post that received dozens of likes and replies.
The employee outlined a plan for China to block off its smartphone market from all American components much in the same way Beijing fostered its Internet tech giants behind a “Great Firewall” that keeps out Google, Facebook, Twitter and dozens of other foreign companies.
“Our domestic market is big enough, we can use this opportunity to build up domestic suppliers and our ecosystem,” the employee wrote.
For his part, Ren advocated the opposite response in his interview with Chinese media.
“We should not promote populism; populism is detrimental to the country,” he said, noting that his family uses Apple products.
Other employees strategized ways to circumvent the US ban.
One advocated turning to Alibaba’s e-commerce platform Taobao to buy the needed components. Another dangled the prospect of setting up dozens of new companies to make purchases from US suppliers.
Many denounced the US and proposed China ban McDonald’s, Coca-Cola and all-American movies and TV shows.
“First time posting under my real name: we must do our jobs well, advance and retreat with our company,” said an employee named Xu Jin.
The tech ban caps months of US effort to isolate Huawei, whose equipment Washington fears could be used as a Trojan horse by Chinese intelligence services.
Still, last week Trump indicated he was willing to include a fix for Huawei in a trade deal that the two economic giants have struggled to seal and US officials issued a 90-day reprieve on the ban.
In Xinsheng, an employee with the handle Youxin lamented: “I want to advance and retreat alongside the company, but then my boss told me to pack up and go,” followed by two sad-face emoticons.