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WASHINGTON – President Donald Trump said trade wars were easy to win. He is about to find out.
Friday's Trump administration was to start charging $ 34 billion worth of Chinese imports. And China has promised to 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 begins – one that could quickly degenerate. I see ourselves running into a complete collision in a few days, "said Ashley Craig, a commercial law attorney at Venable LLP." It looks like both sides are well anchored. "
Here's an overview of what's going on pass and its likely impact.
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WHAT DO WE DO
to impose tariffs of 25% on about 1,100 goods imported from China, d & # 39; worth $ 50 billion a year.It originally proposed tariffs in April, starting with 1,333 Chinese products.After receiving public comments, the administration removed 515 blacklisted imports and added 284.
Starting on Friday, the United States taxes 818 Chinese products, worth $ 34 billion a year, and will not target the 284 additions, worth $ 16 billion, until To it that it collects other public comments. [19659009] ___
HOW DOES CHINA RESPOND?
China warned that she would not yield to Trump's pressure. Once the United States starts taxing Chinese imports on Friday, Beijing has announced that it will charge 25% duty on 545 US products worth $ 34 billion a year – soybean and soybeans. lobster to sport utility vehicles 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 threatened $ 200 billion worth of additional Chinese goods if Beijing continued
WHAT IS BEHIND THE US-CHINA RIFT?
The Trump administration has accused China of using predatory tactics in a lawless campaign to surpass 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. .
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WHAT HAPPENS TO RESTRICTIONS ON INVESTMENT?
The administration is moving on a less draconian plan: it will support an effort in Congress to strengthen foreign investment reviews under the existing Committee. on foreign investment in the United States, 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 Shootout of Customs Duties 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, particularly a war that lasts 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 25% tariff. 100, which will make their crops much more expensive in China.
In addition, US tariffs on imported Chinese products could end up harming 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. It follows that US manufacturers will have to pay more for parts and equipment, which puts them at a disadvantage compared to their foreign competitors
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US ARE NOT ALSO SAVED WITH D & D 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 investments from Mexico 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 dismissed Beijing's commitments as vague, and Trump decided to continue with the tariffs after all.
White House economic adviser Larry Kudlow said the two countries are "in communication" – although there has 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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US
You should go back to the 1930s to find something that is close to hostility between the United States and its major trading partners at this time. During the Great Depression, many countries, including the United States, closed their markets to imports. A fall in world trade has probably worsened depression.
Many less intense trade disputes followed. President Ronald Reagan imposed tariffs on Japanese imports of $ 300 million in a dispute over the semiconductor industry and on Tokyo to impose limits on car deliveries to the United States
. steel. This measure has allowed US steel producers to increase their prices, which has increased costs for companies that buy steel and pushed them to reduce their costs elsewhere. But the rates would have cost significant job losses in the United States.
In 2009, the Obama administration imposed tariffs on Chinese tires, accusing a surge in imports of harming the US tire industry. Beijing counterattacked. It has imposed a tax of up to 105 percent on American chicken feet – a disposable item in the United States that is considered a delicacy in China. The Peterson Institute for the International Economy calculated that fares probably saved 1,200 US tire jobs. But consumers paid more than $ 900,000 in higher prices for every job saved.
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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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