White House: New tariffs on China a 'purely defensive' move

Oscar PerryJun 21, 2018

Trump said his move followed China's decision to raise tariffs on $50 billion in US goods, which came after the White House announced similar tariffs on Chinese goods on Friday. The president said if China chooses to retaliate (as it has with past actions), he'll follow up with tariffs on yet another $200 billion of Chinese goods.

-China tariff war is called off; China signs purchasing orders for $100 billion to $200 billion of US exports; the steel and aluminum tariffs on Canada, Mexico, and the [European Union] are removed; and the NAFTA negotiations are restarted and concluded before the midterms.

The Dow Industrials and S&P 500 fell more than a percent, but the losses in Asia were more severe.

The US market saw a significant plunge in investment from China in the first five months of the year amid a growing trade row between the world's two largest economies.

Trump, speaking to a gathering of small business owners in Washington, is railing again against the North American Free Trade Agreement, saying the US can no longer afford to be the "stupid country".

But Intel shares dropped 3.4 percent to $53.22 on Monday on news of a stock downgrade and investor concerns over tariffs.

Trump said the tariffs will go into effect if China refuses to change its unfair trade practices and insists on going forward with recently announced tariffs.

China's Commerce Ministry on Tuesday criticised the latest threat of tariffs, saying it was an "act of extreme pressure and blackmail that deviates from the consensus reached by both parties after many negotiations and is a disappointment to the global community". He noted that China's Ministry of Commerce has already promised to retaliate with "comprehensive quantitative and qualitative measures" if the US imposes more tariffs. If Trump imposes tariffs on a further $100 billion of goods, the drag on growth could be 0.3 to 0.5 percentage point. China responded in kind by announcing tariffs on American imports.

Still, economists and business executives say there's still some prospect that a full-blown trade war can be avoided.

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Markets soured as economists warned of damaged business confidence, a blow to China's growth prospects and ripple effects through its supply chains.

Beijing responded by announcing that it would impose a similar tax on 659 USA products also worth $50bn and that includes agricultural and marine products as well as cars.

Trade frictions between the United States and Canada have been particularly strained in recent weeks, with Trump taking umbrage at remarks by Canadian Prime Minister Justin Trudeau that were critical of the heavy US tariffs.

Analysis of how the tariffs impact vary and much depends on the final details of the duties that are pushed through.

Wall Street slumped in midday trade as trade tensions between China and the United States continued, as the two largest economies in the world faced a tit-for-tat over trade tariffs.

Prime Minister Justin Trudeau shakes hands with U.S. President Donald Trump during a meeting at the G7 leaders summit in La Malbaie, Que., on Friday, June 8, 2018. "I hope the USA side pays attention to this point", he told a daily news briefing. China has already taken aim at some of these products, such as pork imports, as part of its response to the United States' initial steel and aluminum tariffs in March.

Last week, the US President confirmed that the Us would proceed with its imposition of 25 percent tariffs on Chinese goods worth $50bn.

Harborn said confrontation through tariffs is not the most efficient way to get reforms and opening up that companies have been asking China to deliver.

"The fundamental reality is that talk is cheap", Mr Navarro told reporters on a conference call, saying China "may have underestimated the strong resolve of President Donald J. Trump".

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