Will tariffs against Chinese goods spark trade war?
- Author: Ronnie Bowen Mar 24, 2018,
Mar 24, 2018, 14:13
China's commerce ministry warned that a 15 percent tariff on 120 goods worth nearly $1 billion - including fresh fruit, nuts and wine - would be imposed if the United States fails to reach a "trade compensation agreement" within an unspecified time frame.
Investors fear that the United States measures could escalate into a trade war, with potentially dire consequences for the global economy. Shen Dingli, deputy dean of the Institute of International Affairs at Shanghai's Fudan University, said the numbers announced so far were "actually quite small" compared to overall trade flows.
Trump also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the United States views as strategic, said senior White House economic adviser Everett Eissenstat.
South African futures were lower on Friday, as the JSE all share closed lower for the second consecutive session, on a weaker performance from Naspers.
The Internet Association, a Silicon Valley lobbying group comprising such giants as Google, Amazon and Facebook, also warned that a trade war between USA and China will result in higher prices for consumers, and industry job losses.
Trump said Washington "would no longer tolerate running a trade deficit of almost $400 billion with China", its second-largest trading partner, after the EU. He says when the farm economy is down and crop prices are the lowest they've been in years - it's crucial to increase and foster more trade instead of enhancing the probability of a trade war.
"Jasper Lawler, the head of research at London Capital Group, said: "$3bn is a splash in the ocean of US-China trade. "But China is not afraid of and will not recoil from a trade war", read a statement from its Washington embassy.
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The Chinese government said it will defend itself, and investors are anxious that trade tensions will wreak havoc on the world economy. "One out of every three rows of soybeans that we grow here in the USA goes to China, so it's a big impact".
China quickly responded with tariffs of its own that will hit U.S. imports worth $3 billion.
But in a surprise move, Mr Trump said he was only willing to give the bloc a temporary reprieve, until May 1.
In contrast, trade in the yuan was quiet on Friday, weakening in the morning session before rising just 27 pips against the USA dollar to 6.2361 by 0718 GMT. Chinese President Xi Jinping sent two high-level envoys to Washington last month, but neither managed to resolve the situation, he pointed out.
It followed a seven-month investigation by USTR into allegations China violates U.S. intellectual property, under the seldom-used section 301 of the 1974 Trade Act. "'We will end up negotiating these things rather than fighting over them, in my view", Ross said. "They won't clip the wings of China Inc", he said.
- New US National Security advisor John Bolton will likely harden foreign policy. "Negotiations are much better for everyone".
Sales outside the US are especially important for technology companies. "It's a structural problem which has nothing to do with either the trade deficit or employment".