Trump threatens tariffs on all $505 billion of Chinese imports

China has accused the US of starting the ‘largest trade war in economic history.’ (AFP)
Updated 20 July 2018
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Trump threatens tariffs on all $505 billion of Chinese imports

  • Trump says he is willing to hit all Chinese goods imported to the US with tariffs if necessary
  • China accuses the US of starting the ‘largest trade war in economic history’

WASHINGTON: US President Donald Trump on Friday said he was ready to impose tariffs on all $500 billion of imported goods from China, threatening to escalate a clash over trade policy that has unnerved financial markets.
“We’re down a tremendous amount,” Trump said in an interview about trade imbalances with China on CNBC television broadcast on Friday. “I’m ready to go to 500.”
His comments worried investors already grappling with the impact of a strengthening US dollar on corporate results, and key stock indexes on Wall Street dropped at the open on Friday.
The US dollar fell against major currencies on Friday on Trumps threat to impose more import tariffs and his repetition of complaints about rising interest rates and the strength of the US dollar.
The dollar index, a measure of its value against a basket of six major currencies, was on track to post its largest one-day loss in three weeks. Against the yen, the dollar was on pace for its worst daily fall in two months.
A top Federal Reserve official, meanwhile, warned the trade war could hurt the US economy.
Around $505 billion of Chinese goods were imported to the US in 2017, leading to a trade deficit of nearly $376 billion, US government data shows. Chinese imports from the US totaled $205 billion in the first five months of 2018, with the deficit reaching $152 billion.
Trump is taking a more aggressive, protectionist posture on trade than his recent predecessors, sparking retaliatory measures from other countries. Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports. China promptly levied taxes on the same value of US products.
When asked about the stock market possibly falling if the United States imposes duties on such a large amount of goods, Trump told CNBC: “If it does, it does. Look, I’m not doing this for politics.”
Still, new tariffs could help Trump’s Republican party going into November’s congressional elections. More than 70 percent of Republican and Republican-leaning US adults believe increased tariffs between the United States and its trading partners will be good for the country, according to a Pew Research Center survey released late Thursday.
However, most economists warn that the imposition of import tariffs could disrupt global manufacturing supply chains, raise input costs and raise prices for consumers, leading to slower economic growth.
After the interview, Trump reiterated criticism of the Federal Reserve’s planned interest-rate hikes, posting on Twitter that the tightening policy would diminish any US trade advantage and exacerbate losses from “BAD trade deals.”
St. Louis Federal Reserve Bank James Bullard said on Friday the Fed would remain unaffected by Trump’s comments on monetary policy and expressed concerns about rising tariffs.
“The escalating trade war, if it goes badly, could be a risk for the US economy,” Bullard said, adding he understands the policy’s objective. “But it could be that all we end up with is a lot of tariffs globally and a lot of other types of protectionism globally.”


US government refrains from calling China a currency manipulator

Updated 5 min ago
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US government refrains from calling China a currency manipulator

  • The US Treasury Department said a recent depreciation of China’s yuan currency will likely exacerbate the US trade deficit
  • China is trying to counter some of the yuan depreciation

WASHINGTON: The US government on Wednesday refrained from naming China or any other trading partner as a currency manipulator, as it leans on import tariffs to try to cut a trade deficit with China.
In its semi-annual currency report, the US Treasury Department said a recent depreciation of China’s yuan currency will likely exacerbate the US trade deficit, but US officials found Beijing appeared to be doing little to directly intervene in the currency’s value.
US President Donald Trump has claimed that China’s rise as an exporting powerhouse has hurt US workers and since taking office he has ordered tariffs on more than $200 billion in Chinese imports.
“Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” said Treasury Secretary Steven Mnuchin.
Since the Treasury’s last currency report was issued on April 13, the yuan has fallen by more than 9.0 percent against the US dollar.
In the last week, the currency has pushed closer to the key 7 to the dollar threshold, a level not breached since 2008. Some currency derivatives show market participants expect the yuan to weaken past that level within a year.
The Treasury noted reports that China was trying to counter some of the yuan depreciation and said China could bolster confidence in the yuan by engaging in more market-friendly reforms.
“Treasury is deeply disappointed that China continues to refrain from disclosing its foreign exchange intervention,” the department said in its report.
It added that China should advance macroeconomic reforms that support greater household consumption growth and help rebalance the economy away from investment.
China’s multi-decade investment boom has helped make it the world’s factory and fueled a trade surplus in goods with the US of $390 billion in the 12 months through June.
Some China experts have speculated that Beijing could use yuan devaluation as a weapon in a broader trade war with the US.
The Treasury also said it was keeping China, India, Japan, Germany, South Korea and Switzerland on a monitoring list for extra scrutiny.
The Treasury said it was concerned that South Korea stepped up interventions in currency markets that appeared “to have been for the purpose of slowing won appreciation against the dollar.”
The Treasury said India was on course to be left off the list when it is next updated in six months. India was added in April after a burst in foreign exchange sales by the country’s central bank.