Trump threatens extra tariffs on US$200b of Chinese goods

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Canada and Mexico, both members with Washington of the North American Free Trade Agreement (NAFTA), have not been spared the United States offensive on steel and aluminium and are threatening their own reprisals. If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. "His strategy, now clearer than ever before, appears to hinge on the idea that the US has the upper hand by virtue of its larger import value, and continued threats to target those imports give the USA significantly more leverage than China".

"We estimate tariffs on goods both ways would likely shave off a few tenths of a percentage point off each country's GDP".

Worries about a trade war between the USA and China has been brewing for most of the year as the two countries have traded threats. The trade relationship between the United States and China must be much more equitable.

Neither side has yet imposed tariffs on the other in their growing dispute over technology and the USA trade gap; the first round is to take effect on July 6.

That position - along with the authoritarian nature of its political system - gives China significant leverage to stay the course in any trade war.

If the USA goes ahead with the new $200 billion tariffs, they are more likely to be directly felt by individuals than the previous round.

People in those swing states are taking notice. -China Business Council in Beijing, said China would "begin looking at other ways to enforce action against U.S companies that are operating in the market". Pan said market attention turned to China for "signs of further retaliation". The tariffs were the result of an investigation by Commerce Department into the theft of United States intellectual property by Chinese companies. China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. "This is the kind of thing that needs to be addressed".

"It looks like the probability of a full-blown trade war between the world's two largest economies is rising", said Louis Kuijs, an economist at Oxford Economics.

"The escalating set of tariffs on Chinese goods come as the Treasury Department is developing a set of investment restrictions/export controls on Chinese investment in certain industries and US technology (due June 30)".

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Trump also threatened to hit China with a third wave of tariffs, an additional 10% on another $200 billion worth of Chinese goods, if the country hit back with their own tariffs.

Beijing also drew up a second list of $16 billion in chemical and energy products to hit with new tariffs, though it did not announce a date for imposing them.

Perhaps most importantly, the fast-moving nature of the back and forth means it will be hard to halt.

Reduced Chinese access for USA businesses could be a boon to other foreign companies in a year when China says it will further open its door to overseas investors and firms. "It's more rewarding watching the World Cup".

"Escalation (of trade tensions) is a sort of impossible thing to forecast, but if it stops at this level you have probably created some nice risk premia in Asia and emerging markets", said Hans Peterson, global head of asset allocation at SEB Investment Management. Neither of those tariffs have gone into effect yet. The price of laundry equipment has spiked 17% in the last three months after years of decline, according to Bureau of Labor Statistics data.

"We should be talking about a policy frame work that supports, not slows down, an industry that, unlike many others, still manufactures here in the US", Goodrich said.

In March Washington and Seoul announced agreement on a renegotiated free trade accord, giving U.S. carmakers greater access to the South Korean market.

Pompeo on Monday described US actions as "economic diplomacy, " which, when done right, strengthens national security and worldwide alliances, he added. At the same, Trump's tax cuts and higher spending have actually exacerbated the trade deficit, which he ostensibly hopes to reduce with his trade agenda.

"I understand where President Trump's coming from", he said.

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