US, China impose fresh tariffs with no trade talks in sight

US tariffs on $200 billion worth of Chinese goods and retaliatory tariffs by Beijing on $60 billion worth of US products took effect on Monday. (AP)
Updated 24 September 2018
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US, China impose fresh tariffs with no trade talks in sight

  • The two countries have already slapped tariffs on $50 billion worth of each other’s goods earlier this year
  • Trade talks in Washington last month produced no meaningful progress

BEIJING: The US and China imposed fresh tariffs on each other’s goods on Monday, as the world’s biggest economies showed no signs of backing down from an increasing bitter trade dispute that has rattled financial markets.
US tariffs on $200 billion worth of Chinese goods and retaliatory tariffs by Beijing on $60 billion worth of US products took effect as of 0401 GMT.
The two countries have already slapped tariffs on $50 billion worth of each other’s goods earlier this year.
Chinese products hit with new US duties include vacuum cleaners to Internet-connected devices, while US goods targeted by Beijing include liquefied natural gas and certain types of aircraft.
China’s state council will publish a white paper at 1 pm local time (0500 GMT) on the trade frictions with the US, the official Xinhua news agency reported, without giving further details.
Though a senior White House official last week said the US will continue to engage China for a “positive way forward,” neither side has signaled willingness to compromise.
The US official said on Friday there was no date set for the next round of talks. The Wall Street Journal reported that China, which has accused Washington of being insincere in trade negotiations, has decided not to send Vice Premier Liu He to Washington this week.
Economists warn that a protracted dispute will eventually stunt growth not just in the US and China but across the broader global economy.
The trade tensions have also cast a pall over broader relations between Beijing and Washington, with the two sides butting heads on a growing number of issues.
China summoned the US ambassador in Beijing and postponed joint military talks in protest against a US decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system.
Trade talks in Washington last month produced no meaningful progress.
Rob Carnell, chief Asia economist at ING, said in a note to clients that in the absence of any incentives Beijing would likely hold off on any further negotiations for now.
“It would look weak both to the US and at home,” he said, adding that there is “sufficient stimulus in the pipeline” to limit the damage of the latest tariffs on China’s growth.
“The US-China trade war has no clear end in sight.”
China may also be waiting for US mid-term elections early next month for any hints of changes in Washington’s policy stance, Carnell added.
“With generic polls favoring the Democrats, they may feel that the trade environment will be less hostile after November 6.”
The US administration will levy tariffs of 10 percent on the $200 billion of Chinese products, with the tariffs to go up to 25 percent by the end of 2018.
Beijing set its new levies on $60 billion of US goods at 5 and 10 percent and warned it would respond to any rise in US tariffs on Chinese products accordingly.
US President Donald Trump on Saturday reiterated a threat to impose further tariffs on Chinese goods should Beijing retaliate, in line with his previous comments signaling that Washington may move to impose tariffs on virtually all imported Chinese goods if the administration does not get its way.
China imports far less from the US, making a dollar-for-dollar match on any new US tariffs impossible.
Instead, it has warned of “qualitative” measures to retaliate.
Though Beijing has not revealed what such steps might be, business executives and analysts say China could withhold exports of certain products to the US or create more administrative red tape for American companies.
Some analysts say there is also a risk that China could allow its yuan currency to weaken again to cushion the blow to its exporters.


UK inflation rises in April by less than Bank of England expected

Updated 43 min 35 sec ago
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UK inflation rises in April by less than Bank of England expected

  • Consumer prices rose at an annual rate of 2.1 percent in April after a 1.9 percent increase in March
  • Electricity and gas prices were the biggest driver of inflation last month

LONDON: British inflation rose last month by less than the Bank of England and investors had expected, but still hit its highest level this year, pushed up by a rise in energy bills.
Consumer prices rose at an annual rate of 2.1 percent in April after a 1.9 percent increase in March, the Office for National Statistics said on Wednesday. A Reuters poll of economists had pointed to a rate of 2.2 percent, the same as the BoE’s forecast.
Sterling and government bonds were little changed by the data as core inflation, which excludes energy and food prices, held steady at 1.8 percent for the third month in a row.
“In principle, this is another reason to think the Bank of England will keep rates on hold for the foreseeable future,” ING economist James Smith said.
But he added that a strong labor market meant an interest rate hike in November could not be ruled out.
A recent weakening of inflation, combined with the lowest unemployment rate in 44 years and rising wages, has taken the edge off the uncertainty about Brexit for many households whose spending drives Britain’s economy.
But Britain’s energy regulator raised a price cap on energy providers by 10 percent with effect from April, and all big six suppliers raised their standard prices by the same amount, which the BoE said would push inflation above target briefly.
Electricity and gas prices were the biggest driver of inflation last month, the ONS said.
Computer game and package holiday prices helped to offset the impact of the higher bills.
The ONS figures also suggested less short-term pressure in the pipeline for consumer prices than expected.
Manufacturers’ costs for raw materials — many of them imported — were 3.8 percent higher than in April 2018, much less than the 4.5 percent rise predicted by the Reuters poll.
The ONS said house prices in March rose by an annual 1.4 percent across the United Kingdom as a whole compared with 1.0 percent in February, marking the first increase in house price inflation since September.
Prices in London alone fell by 1.9 percent, a smaller drop than in February.
The ONS also revised down its estimate for Britain’s budget deficit in the last 2018/19 financial year that ended in March.
The headline measure of public sector net borrowing amounted to £23.5 billion ($29.8 billion) that year or 1.1 percent of gross domestic product, compared with the previous estimate of £24.7 billion or 1.2 percent of GDP.
In April, the first year of the 2019/20 financial year, the deficit stood at £5.8 billion, as expected by economists.