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WASHINGTON – President Donald Trump said trade wars were easy to win. He is about to find out.
Unless a last-minute breakthrough, the Trump Friday administration will start charging duties on $ 34 billion of Chinese imports. And China will respond quickly with tariffs on an equal amount of US exports
And just like that, a high-risk trade war between the two largest economies in the world will begin – a war that could quickly escalate .
"said Ashley Craig, a lawyer specializing in commercial law at Venable LLP. "It seems that both sides are pretty busy."
Here is an overview of what is happening this week and its likely impact.
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WHAT DO WE DO?
The White House last month announced plans to impose 25% tariffs on about 1,100 goods imported from China, worth $ 50 billion a year. He originally proposed tariffs in April, starting with 1,333 Chinese products. After receiving public comments, the administration removed 515 blacklisted imports and added 284.
As of Friday, the United States will impose 818 Chinese products, of value $ 34 billion a year. It will not target the 284 additions, worth $ 16 billion, until it gathers further public comment.
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HOW DOES CHINA RESPOND?
China warned that she would not yield to Trump's pressure. If the US begins to tax Chinese imports on Friday, Beijing plans to charge 25% duty on 545 US products worth $ 34 billion a year – soy and lobster to vehicles utilities and whiskey. China plans to impose a resale right on 114 additional US products, worth $ 16 billion a year.
The list of products targeted by Beijing in the United States to penalize is heavy for agriculture. This is not a coincidence. Its tariffs are supposed to hurt American farmers, who overwhelmingly supported Trump in the 2016 elections and whose interests are represented by powerful lobbyists and members of Congress.
Meanwhile, Trump told his US representative, Robert Lighthizer, to identify $ 200 billion more in Chinese products for 10% tariffs. These sanctions would come into effect, according to Trump, if Beijing did not reform its business practices and did not carry retaliatory tariffs.
The stakes could rise further: Trump has threatened $ 200 billion worth of additional Chinese goods if Beijing continues
WHAT IS BEHIND THE US-CHINA RIFT?
The Trump administration has accused China of using predatory tactics in a lawless campaign to surpbad US technological supremacy. US officials point to Beijing's long-term development plan, "Made in China 2025," which calls for the creation of powerful Chinese entities in the fields of information technology, robotics, computer technology, and computer science. aerospace, electric vehicles and biopharmaceuticals. "Made in China 2025" injects them unjustly into these industries. The Office of the United States Representative concluded after an investigation that Chinese tactics would force the United States and other foreign companies to divest technology in exchange for access to the vast Chinese market at the same time. pure and simple flight. The United States also claim that Beijing uses the state's money to buy American technology at prices unaffordable for private companies.
In May, the White House announced that it would limit Chinese investment in US technology by June 30. . But last week he abandoned this plan
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WHAT HAPPENS TO RESTRICTIONS ON INVESTMENT? The administration was installed last week on a less draconian plan: it would support an effort in Congress to strengthen reviews of existing foreign investments. US Foreign Investment Committee, or CFIUS. This committee, led by the Secretary of the Treasury, examines whether foreign investment poses a risk to US national security. These reviews apply to all countries – not just China – and are conducted on a case-by-case basis.
The House has approved a bill to strengthen the CFIUS Act, and the bill is likely to be considered by a Senate. Conference Committee for a Defense Measure Approved by the Senate
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WHAT IS THE LIKELY IMPLICATION OF AN AMERICAN-CHINESE ECONOMIC WAR
The Initial Toss of Customs Duties Will Probably Cause little damage to the United States, China or Canada? Mondial economy. But if they worsen, the pain will become envenomous and spread.
Bank of America economists Merrill Lynch warned that a full-fledged trade war, especially a war of more than a year, would slow down the US economy. By disrupting supply chains, eroding business confidence and heightening uncertainty, a trade war could, they say, "push the economy into a full-blown recession" and jeopardize business. American economic expansion – the second longest ever recorded
soon endure difficulties, too. Consider American soybean producers, who send about 60% of their exports to China. Their shipments will now be subject to a tariff of 25%, which will instantly make their harvest much more expensive in China.
In addition, US tariffs on imported Chinese products could end up hurting US manufacturers. The Peterson Institute for International Economics calculates that 85% of Chinese products that will be hit by Trump's initial tariffs are machines and components used in finished products manufactured in the United States. As a result, US manufacturers will have to pay more for parts and materials, which puts them at a competitive disadvantage compared to foreign competitors
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US CAN NOT ALSO SAVE WITH D & # 39; OTHER BUSINESS PARTNERS? . Trump is fighting in almost every direction. It imposed tariffs on steel and aluminum imports, measures that resulted in retaliatory tariffs from US allies such as Canada, Mexico and the Union. European. The president also threatens to impose tariffs on imported vehicles and auto parts because they pose a threat to US national security.
He is pressuring Canada and Mexico to agree to rewrite the North American Free Trade Agreement. Auto production in the United States and encourage companies to move Mexico's investments to the United States.
In fighting with American friends, critics say, Trump wasted an opportunity to build a united front against China. After all, Europe, Japan and other rich countries complain about the same business practices as America.
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Is there any reason to expect a resolution? For a while, peace seemed close. In May, Treasury Secretary Steven Mnuchin said the trade war was suspended. The Trump administration has suspended tariffs after Beijing agreed to increase its purchases of US goods, particularly in agriculture and energy. The idea was that China's additional purchases would reduce its trade surplus with the United States. Yet the ceasefire was short-lived. Critics have dismissed Beijing's commitments as vague, and Trump has decided to continue tariffs after all.
White House economic adviser Larry Kudlow said the two countries are "in communication" – although there have been no negotiations. Trump himself told Fox News Channel's "Sunday Morning Futures with Maria Bartiromo" that "China wants to make a deal, and so do I, but it must be a good deal for this country."
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Follow Paul Wiseman on Twitter at https://twitter.com/PaulWisemanAP
Copyright 2018 The Associated Press. All rights reserved. This document may not be published, distributed, rewritten or redistributed.
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