US Worsens Trade War with China

Screen Shot 2018 08 02

In response to earlier reports that the U.S. was considering the move, Chinese foreign ministry spokesman Geng Shuang warned Wednesday that "blackmail and pressure from the United States side will never work on China".

"We urge the United States to come to its senses, correct its erroneous acts and create the necessary condition for a proper settlement as soon as possible", spokesman Geng Shuang said.

In June, Trump directed the Office of the US Trade Representative (USTR) to impose an additional 10% tariff on US$200bn of Chinese goods, in response to China's decision to impose retaliatory duties on US goods.

Urging cooler heads in Washington to prevail, Mr Wang made the case that USA tariffs would hurt its own consumers and businesses, given how globalised trade is today.

"Escalating tariffs against China is the wrong approach to address legitimate concerns US businesses have with China's harmful practices", said Myron Brilliant, head of global affairs for the US Chamber of Commerce.

-China trade war, we covered blowback - the Chinese foreign ministry accused the USA of "blackmail" - to the White House's reported desire to ratchet up the tariff level on $200 billion of Chinese goods from 10 percent to 25 percent.

Lighthizer said China's decision caused "further harm to U.S. workers, farmers and businesses".

Representatives of US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have been speaking privately as they seek to restart negotiations to defuse the budding trade war, Bloomberg reported, citing sources.

- Tariff increases from 10% to 25% follow CNY currency fall.

The latest signal that China's economy may be feeling some pain associated with Trump's tariffs on about $34 billion in Chinese goods was the softening of the Purchasing Managers' Index (PMI) in July.

Wang Yi said at a forum in Singapore that a US campaign to ratchet up pressure on Beijing will not "have any effect", Reuters reported.

The Commerce Department said on Friday the trade gap surged 7.3 per cent to $46.3 billion.

"Each tariff escalation leads to further retaliatory action from China - ultimately inflicting even more harm on American businesses, workers, farmers, ranchers, and consumers".

Investors fear an escalating trade war between Washington and Beijing could hit global economic growth, and prominent USA business groups, while tired of what they see as China's mercantilist trade practices, have condemned Trump's aggressive tariffs.

Markets were however steady on Tuesday, given a boost by hopes for new negotiations.

Earlier on Wednesday, Congress passed legislation that will strengthen national security-related checks on Chinese investment in the United States, a move that is also aimed at curbing China's ability to capture valuable American technology.

The bill has started to mount, with the USA government dipping into its coffers to find $US12 billion to aid farmers who have been hit by Chinese retaliation. China immediately responded with equal measures.

But slowing growth, wilting confidence, and trade war fears are not likely to deter major central banks moving away from their ultra-loose monetary policies put in place during the last financial crisis. The US will issue more than $US1 trillion of bonds this year, an amount also affected by the Fed's steady shrinkage of its balance sheet.

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