Trump Threatens Tariffs on $200B in Chinese Goods

Trump Threatens Tariffs on $200B in Chinese Goods

In a statement, Trump says he has an "excellent relationship" with Xi, "but the United States will no longer be taken advantage of on trade by China and other countries in the world".

The collateral damage could be widespread. Companies would pay more for imported parts and would have to decide whether to absorb those higher costs - or pass them on to their customers.

His words were echoed by Richard Liu, founder and CEO of JD.com, who told CNBC that a Chinese preference for imported goods would ultimately mean American brands would suffer most.

Washington rescinded a ban on sales of USA technology to ZTE after the company agreed to pay a $1 billion fine and hire American-picked compliance managers.

"In this trade war, it's the USA who is playing the role of provocateur, while China plays defence", said the Global Times, a newspaper published by the ruling Communist Party.

On Wall Street, the Dow Jones Industrial Average closed down 1.1% on Tuesday.

Shares of Japanese construction equipment makers Komatsu Ltd and Hitachi Construction Machinery tumbled 3.9 percent and 2.8 percent, respectively.

President Donald Trump told Apple Inc Chief Executive Tim Cook that the USA government would not levy tariffs on iPhones assembled in China, the New York Times reported on Monday, citing a source familiar with the negotiations.

Beijing's response drew the president's ire.

Both sides announced tariffs on $50 billion of each other's products last week, and President Donald Trump upped the ante further on Monday with a threat to impose duties on at least another $200 billion of Chinese goods.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology".

Chinese investors dumped stocks across the board on Tuesday as U.S. President Donald Trump threatened China with more tariffs, knocking the Shanghai benchmark to a near two-year low despite government efforts to assuage the panic.

Mr Trump said that if China responds to this fresh round of tariffs, then he will move to counter "by pursuing additional tariffs on another 200 billion dollars of goods".

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"The U.S. market has acted much stronger than the global equity markets", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "There are going to be serious consequences".

The moves could start to meaningfully slow USA growth, economists warn. In addition, he warned, he would seek tariffs on yet another $200 billion in Chinese goods if Beijing increased its tariffs again.

The battle between Trump and Beijing has kicked into high gear over the past week. China couldn't come close to matching America's tariffs on $450 billion of Chinese exports.

China and the United States traded goods and services worth over $650 billion in 2016. China doesn't import enough goods from the U.S.to match the scale of Trump's proposal but could adopt other methods. China had offered to ramp up purchases of American goods by $70bn to help cut its yawning trade surplus with the United States, whereas Trump had demanded a $200bn deficit cut. Or it could hold up their products at customs.

Steel companies also took sharp losses.

Oil prices were under pressure as China's retaliatory tariffs included USA crude oil. -China Relations. Companies in the Standard & Poor's 500 derive a collective 5.5 percent of their revenue from China, according to the data firm FactSet.

Shares in supermarket Tesco, Britain's biggest retailer, meanwhile jumped 2.6 percent after the company reported solid first-quarter sales. Chipmaker Qorvo gets over half its revenue in China, Intel almost 23 percent. More American targets are likely to follow as soon as the Trump administration follows through with publishing an expanded tariff list.

Several industry groups covering everything from auto manufacturers to winemakers sent a letter to GOP lawmakers urging Congress to step in to block Trump's tariffs. Virtually all economists agree that restricting trade has damaging economic consequences for all countries that employ such policies, but the scale and the scope of the losses are potentially huge, not just for the USA and China, but also for countries not directly involved.

Investors panicked over the prospects of a full-blown trade war between Washington and Beijing.

But last week, Trump unveiled a revised list that included several categories of chips, raising fears that tariffs could impact the USA technology sector.

Washington has shown no sign of backing off either. It has promptly matched every US threat with its own.

They view plans for state-led development of companies capable of competing globally in fields including electric cars, renewable energy and biotech as a route to prosperity and to restore China to its rightful role as a world leader. Other action could include measures against the $200 billion worth of United States investments in China.

"Trump's view that bullying and threats will advance USA long-term economic interests seems set to encounter a harsh dose of realism", said Eswar Prasad, professor of trade policy at Cornell University.

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