U.S. President Donald Trump warned on Friday that he has tariffs ready to go on $267 billion worth of Chinese imports in addition to the $200 billion of the Asian nation’s goods already facing the risk of duties.

Stock Market News Today

“The $200 billion we are talking about could take place very soon depending on what happens with them. To a certain extent its going to be up to China,” Trump said. “And I hate to say this, but behind that is another $267 billion ready to go on short notice if I want. That changes the equation.”

Trump has already imposed 25 percent tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts, including semiconductors. A public comment period ended late on Thursday on a $200 billion list of consumer and other Chinese goods that would be subject to tariffs of 10 percent to 25 percent. The United States imported $505 billion in goods from China last year, and 2018 Chinese imports through July were up nearly 9 percent over the same period of 2017, according to U.S. Census Bureau data.

The dollar gained around 0.4 percent against China’s off-shore traded yuan following Trump’s comments. U.S. stocks also weakened further, with the S&P 500 dropping about 0.3 percent

Earlier on Friday, White House economic adviser Larry Kudlow said the Trump administration would evaluate the public comments before making any decisions on the $200 billion tariff list.

The U.S. Trade Representative’s office received nearly 6,000 comments and held seven days of public hearings on the proposed levies. “The president himself, we will evaluate the comments and we will make a decision regarding the $200 billion,” Kudlow said on Bloomberg Television. “We’ll make a decision on the volume, on the rate, on the timing, I don’t want to get ahead of that curve, it’s out there.”

Kudlow, who heads the National Economic Council, separately told CNBC that the administration was still talking with China about trade issues but that so far China had not met U.S. requests.

The United States has demanded that China better protect American intellectual property, cut its U.S. trade surplus, allow U.S. companies greater access to its markets and roll back its high technology industrial subsidy programs.

“We are still talking with China on a number of issues … Those talks will continue to go on. We want lower (trade) barriers across the board,” Kudlow said. Specifically, Kudlow said, the United States was seeking “zero tariffs, zero non-tariff barriers, zero subsidies, stop the IP theft, stop the technology transfer, allow Americans to own their own companies.”

“Those have been our asks for many months and so far those asks have not been satisfied,” he said. “However, hope springs eternal.”

U.S. – China Trade. In 2017, China was America’s largest trade partner ahead of Canada, accounting for 16.4% of the total trade. U.S. imports from China exceeded exports by nearly $375 billion.

The largest component of the California-China trade is computer and electronic parts including – of course – iPhones. While Apple’s supply chain details that some parts are sourced from countries other than China, since the phones are assembled there, any phones not sold in China are considered the Asian giant’s exports. (See also: 10 Major Companies Tied to the Apple Supply Chain.)

Louisiana is the state with the largest trade surplus with China at $6.6 billion (nearly 4.6% of California’s deficit) in 2017. The biggest driver for this is the state’s exports of oilseeds (e.g. soybean and cotton) and grains.

Tough Talk on Trade. President Trump has repeatedly talked tough on China, accusing the Asian economic powerhouse of manipulating its currency.

“Trade between our nations has been very unfair, for a very long time. This situation is no longer sustainable. China has, for example, long been engaging in several unfair practices related to the acquisition of American intellectual property and technology,” Trump said in a White House Statement on June 15. “In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25% tariff on $50 billion of goods from China that contain industrially significant technologies.” The Trump administration continues to reinforce this stance with this new round of tariffs.

“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition. We have been very clear and detailed regarding the specific changes China should undertake,” said U.S. Trade Representative Robert Lighthizer, in a USTR statement from July 10. “Unfortunately, China has not changed its behavior – behavior that puts the future of the U.S. economy at risk. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products.”

The economy was the major focus of Trump during the 2016 presidential election and many consider voter anxiety over jobs as one of the reasons Trump won the race. While Trump denounced U.S. trade deficits with countries like China and Mexico, the truth is that many companies and jobs in the country are dependent on this trade.

Trump’s China Tariffs: What’s at Stake for the US?

It’s a very crucial time for U.S.-China trade relations. The tariffs are the result of what the Trump administration says are its efforts to level the playing field with China, which has been long accused of dumping low-cost products in America and breaching intellectual property rights.

Will Tariffs Hit America More than China?. While the Trump administration is keen on tariffs, the bulk of American businesses and trade groups have a different point of view – tariffs will come at a big economic cost. The reason is simple – America is primarily an importing nation. Tariffs will make goods costly and setting up manufacturing units locally will be a costly and time consuming venture. The cost advantage currently offered by goods made in China has many U.S. businesses running profitably.

Additionally, many startups will now be at a disadvantage if they have to import high cost goods and components due to the tariffs. Their foreign competitors will now have an edge as they will be able to continue to benefit from Chinese imports. Tariffs will also reduce the choice for consumers. Failure to import low-cost components for manufacturing and/or assembling in the U.S. for downstream products will have a detrimental effect on such businesses.

Before the tariffs are imposed, the US Trade Representative (USTR) will hear concerns, if any, from the various businesses, industries and trade groups representing various sectors such as retail, technology, steel and agriculture industries. The discussions are scheduled for this week, and will see participation from more than 120 business groups and industries.

Reactions from Trade Groups. One of Washington’s largest trade organizations, the National Retail Federation (NRF), has been vehemently opposing the tariffs, and its efforts include raising awareness among the public by running ads during popular TV shows. Highlighting the realistic problems faced by businesses, the NRF argues that retailers finalize vendors six-to-12 months in advance leaving no scope to cancel orders of Chinese items facing tariffs. The retailers will end up passing the high cost to end consumers.

Another trade group, the Consumer Technology Association (CTA), which represents more than 2,200 developers, manufacturers, and retailers in the consumer technology industry, is worried that the proposed tariffs will not only increase the cost of TVs made in China by around 25 percent, but also that of domestic TVs as certain parts are imported. CTA has also prepared a specific list of 193 items that it demands should be kept out of tariffs, which includes cash registers, steel nuts, and home dishwashers.

“Tariffs are the wrong approach and will only drive up prices for American consumers,” said Matthew Shay, president and CEO of the retail trade group, which represents retailers like Macy’s, BJ’s Wholesale Club and Sam’s Club, reports CNN.


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10 replies


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