Published: Wed, June 20, 2018
Global | By Enrique Rogers

Renewed U.S.-China trade spat boosts safety demand for yen

Renewed U.S.-China trade spat boosts safety demand for yen

"With the Trump team apparently of the view that the USA can win trade wars, and China determined to fight one if it ensues, it increasingly looks like we cannot preclude a full-blown trade war between the world's two largest economies".

If the U.S. goes ahead with the new $200 billion tariffs, they are more likely to be directly felt by individuals than the previous round. The tariffs were quickly matched by China on US exports, a move that drew the president's ire.

USA lawmakers are trying to block Trump's deal with ZTE.

President Donald Trump announced on Monday that he was considering a 10 percent tariff on $200 billion in additional imports from China. "The trade relationship between the United States and China must be much more equitable", he said. The list was created using a computer algorithm that chose products to hurt Chinese exporters while limiting the impact on USA buyers. The administration also revived its complaints Tuesday about America's gaping trade deficit with China, which it says reflects an unfair trading relationship.

China responded with a 178.6 percent tariff on all imports of sorghum to the United States.

The president warned that he was prepared to hit China with an additional US$200 billion in import taxes unless Beijing capitulates. Oxford Economics estimates that if Trump imposed the $200 billion in duties and China responded in kind, USA growth could slow by 0.3 percentage point next year.

Stephen Innes, head of Asia-Pacific trading at Oanda, said Trump's latest move goes "beyond "tit-for-tat" levels and, predictably, investors are running for cover under the haven umbrellas as global equity indices are crumbling under the weight of an escalating trade war".

The move followed tariffs applied last week on United States dollars 50 billion in Chinese imports to the US.

"If people thought this was really going to be a trade war, stocks would be down a lot more".

Initiative to break California into 3 states to go on November ballot
Southern California would include much of our part of the Central Valley, from Madera County down to San Diego County. California would include Los Angeles , Monterey, San Benito, San Luis Obispo, Santa Barbara and Ventura counties.

"The biggest thing hanging over markets is trade and the back and forth between the USA and China", said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

Trump's latest tariffs Monday came on the same day the Senate voted to reverse the Commerce Department's recent move to save Chinese telecommunications giant ZTE by lifting a seven-year ban on the company doing business with US firms, which was imposed after ZTE was found violating the terms of 2017 penalty agreement.

For its part, China said it "doesn't want a trade war" but has to "fight back strongly", a Commerce Ministry statement said on Saturday. Congress scorned Trump's amnesty for ZTE; the press revealed that China hadalready been planning to increase its intake of American agriculture before negotiations with the White House had even begun; and the White House's China hawks pushed the president to chart a tougher course.

In the first round of penalties announced by both nations, to take effect July 6, the US plans to impose tariffs of 25 per cent on $34 billion of Chinese imports, such as construction machinery, aerospace and power generation equipment.

These include major American exports to China such as soybeans, which brought in $14 billion in sales previous year and are grown in states that supported Trump during the 2016 presidential election.

Since June 1, steel and aluminium imports from the European Union, Canada and Mexico have been hit with tariffs of 25 per cent and 10 per cent, respectively.

The White House said it would consult on tariffs on the other $16bn of products, and would apply these later.

"Beijing will not panic in response to Trump's latest threat, but will be deeply concerned", said Eurasia Group in a report.

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