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You Want Trade War, Here’s The War!! – China Strikes Back, And It’s Just The Appetizer



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Mar 23 2018
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President Donald Trump, as anticipated, signed an executive memorandum that would impose tariffs on up to US$60 billion in Chinese imports on Thursday. Unlike the earlier tariffs of 25% on steel imports and 10% on aluminium imports signed earlier this month, the latest tariffs are designed to specifically punish China unfair trade practices with the U.S.

 

As he signed Thursday’s memo, Trump said – “This is the first of many trade actions”. Obviously, the U.S. president hinted of more punishments on China. The new tariffs, says Trump, are designed to penalize China for stealing American companies’ IP (intellectual property). The list of Chinese products being targeted will be unveiled within 15 days.

 

Donald Trump has repeatedly highlighted China’s US$375 billion surplus with the U.S. as evidence of an unfair trade relationship. However, Beijing argues that it should not be punished if it doesn’t want to buy what the U.S. is selling. As retaliation, China, the world’s second largest economy, has responded to Trump’s tariffs with a counter-tariff measure.

United States Dried Fruit

The Ministry of Commerce of the People’s Republic of China has proposed a list of 128 U.S. products as potential retaliation targets. American products such as fresh fruit, dried fruit, nuts, wine, steel pipes, American ginseng and modified ethanol would be subject to additional 15% tariffs. Beijing would slap additional 25% tariffs on more valuable American products such as pork.

 

China’s counter-tariffs, however, is valued at only US$3 billion. Some ignorant people jumped into conclusion that President Trump has easily won the trade war. It doesn’t take a rocket scientist to calculate US$60 billion minus US$3 billion to decide the winner. Well, the Chinese wasn’t born yesterday and surely didn’t become a skilful businessman overnight.

 

The Chinese’s tariffs announcement is actually to “balance out the losses sustained by China” due to U.S.’ increased tariffs on steel and aluminium imports, which went into effect on Friday, “NOT” to counter Trump’s Thursday US$60 billion new tariffs. China has something else for that. And what was China’s losses resulting from Trump’s steel and aluminium tariffs? Only US$689 million!!

President Donald Trump and President Xi Jinping - Awkward Handshake

It doesn’t take a rocket scientist to find the winner. Do the Maths – China’s US$689 million losses against America’s US$3 billion losses. Yes, the Chinese first counter-tariffs are just the beginning – the appetizer. The Chinese Ministry of Commerce announcement did not even mention Mr. Trump’s latest round of tariffs aimed at US$60 billion Chinese-made goods.

 

It’s worth to note that the list of 128 products announced by Beijing did not mention soybeans, corns, Boeing, smartphones or other electronic products. Hence China could be waiting for the list of Chinese products to be targeted to be published, before they hit the United States with a new – bigger wave – of more disaster retaliation.

 

China’s ambassador to Washington, Cui Tiankai, said on Thursday that Beijing would retaliate against those tariffs on US$60 billion of Chinese goods. He said – “We do not want a trade war with the United States or with anybody else, but we are not afraid of it. If somebody tries to impose a trade war upon us, we will fight. We will do whatever we can to defend the legitimate interests.”

American Soybeans Farmer

Mr. Cui also said – “We will retaliate. If people want to play tough, we will play tough with them and see who will last longer.” A strongly worded statement from the Chinese Embassy in Washington could be taken as empty rhetoric by some. But the stock markets aren’t convinced Beijing is bluffing, sending Dow Jones lower by nearly 3% or 724 points.

 

China has also highlighted that it’s not their fault that U.S. is experiencing deficit. They said that while the U.S. complains about the need for ‘‘fairness’’ and ‘‘reciprocity’’ in trade, at the same time the U.S. refuses to sell high-tech products to China to help rebalance the so-called unfair trade. It doesn’t make sense for China to buy low-tech American products which the Chinese themselves could produce.

 

However, it’s unknown if China plans to match or exceed the value of tariffs – US$60 billion – announced by Trump administration on Thursday. If they do, the global stock and financial markets could experience a major meltdown not seen in any trade war before. But the game isn’t about who can throw a bigger number at each other. It’s about who would get hurt the most.

US General Motors - China HQ

Xu Hongcai, deputy chief economist at the China Centre for International Economic Exchanges, a Beijing think tank, said – “If we really want to counter, the strongest response would be to target soybean and automobiles. This would hurt the U.S. seriously. China is drawing its bow but not firing. We still have some cards to play.”

 

China is fighting back because Trump’s move is seen as a strategic and a deliberate move designed to undermine the 10 industries in Beijing’s “Made in China 2025” industrial policy plan – such as IT, robotics, aerospace, energy saving vehicles and medical devices. China wants to dominate these industries to create national champions to advance its economic and military power across the world.

 

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Comments

PS You have left out the present PRC rates on the products concerned. Thank you

China has to be reined in, it is growing too fast and too powerful. It is country i would say has no morals. Let Trump do what other US presidents dare not do. He has to sacrifice his 2 term.

Yeah, like the US is not too powerful and is full of integrity and high morals.

Going around for years with its hypocrisy of Democracy and Human Rights while holding hands with the Saudis whose human rights record is criminal. It’s all about Oil, Oil and more Oil. Now now it has its own production of oil, true to its viper nature, US is now dumping the Saudis faster than one could say Friendship Through Thick and Thin.

Look at its military industrial complex in collaboration with CIA which ferment wars all over the place, high handedly changing heads of government in at least 72 states and brought untold misery to the hapless innocents there, nurture and weaponized terrorist groups like ISIS and Al-Queda….

Of course US just simply cannot accept that China is on the cusp of being the most powerful economy in the world soon and the latest coup by China with its PetroYuan could be the last straw that draws out the hysteria that US is going through. Too bad this China juggenaut cannot be stopped, so US of A, eat your heart out.

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