Trump slaps tariffs on USD200 bn of Chinese goods, Beijing to hit back
US President Donald Trump has stepped up his trade battle with China by slapping 10 per cent tariffs on $200 billion worth of Chinese imports, which Beijing said it will retaliate against.
The new wave of tariffs will go into effect on September 24 and will climb to 25 per cent on January 1, 2019, the Trump administration announced on Monday. These will apply to almost 6,000 items, marking the biggest round of US tariffs so far.
Trump showed no sign of backing down from the type of full-blown trade war between the world's two largest economies that rattled financial markets, saying he was prepared to "immediately" place tariffs on another $267 billion worth of imports "if China takes retaliatory action against our farmers or other industries", the New York Times reported.
The additional tariffs were on top of penalties enacted earlier in July on $50 billion worth of Chinese goods. Taken together, it means roughly half of the products that China sells to the US each year will be hit by American tariffs.
Unlike the first round of tariffs, which were intended to minimize the impact on American consumers, this wave could raise prices on everyday products including electronics, food, tools and housewares.
In response, the Chinese Commerce Ministry said that "Washington's move will force Beijing to take countermeasures" and warned that the action would add more uncertainties to the trade talks.
"We feel deeply regretful over the decision. China will be forced to take synchronous countermeasures to safeguard our legitimate rights and interests as well as the global free trade order," the Chinese Commerce Ministry spokesperson said in a statement.
"The US additional tariffs have brought new uncertainties for bilateral consultations."
The Chinese Foreign Ministry said that "what the US has done shows no sincerity and no good faith at all".
"We have been stressing that talks need to happen on the basis of parity, equality and good faith to resolve the relevant issues between the two sides. This is only way out," Ministry's spokesperson Geng Shuang said.
Asked what kind of retaliatory action will China take, Geng said Beijing will take countermeasures in due time.
The list slated for tariffs originally included more than 6,000 items, but US officials later removed about 300 types of items, including smart watches, bicycle helmets, play pens, high chairs and baby car seats.
Trump said the latest round of tariffs was in response to China's "unfair trade practices".
"The tariffs are designed to force China to change a range of unfair trade practices, including compelling American companies to surrender their technology in return for access to the Chinese market.
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices," he said.
After opening lower, the Shanghai stock market ended the day 1.8 per cent higher, while Tokyo was up 1.4 per cent and Hong Kong gained 0.6 per cent.
US Treasury Secretary Steven Mnuchin had invited the Chinese negotiators to Washington this week to resume talks. But Beijing said that "the US insistence on imposing tariffs brings new uncertainties" to those negotiations.
White House National Economic Council Director Larry Kudlow on Monday said that the US was still willing to continue its dialogue with China.
"We stand ready to negotiate with China anytime, if they are willing to engage in serious talks," she said at the Economic Club of New York.
European Union's Vice-President Valdis Dombrovskis said that the new tariffs will increase downside risks to the world economy.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


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    What Happens When the Next Financial Crisis Strikes?
    It came as a nasty surprise to almost everyone a decade ago when we found ourselves on the cusp of a worldwide financial collapse.
    Most business journalists — including me — failed to see the 2008 disaster until it was almost upon us. But these days, predicting meltdowns has become positively trendy. With stocks at or near record levels, unemployment low and the economy booming, it’s become conventional journalistic wisdom to predict that evil days lie ahead. And not very far ahead. The recent New York Times editorial, “Inviting the Next Financial Crisis,” is just one example.
    But I don’t think that today’s obvious problems will cause tomorrow’s crisis. Why? Because obvious problems usually don’t cause crises. You get a crisis when problems combine in unpredictable and unforeseen ways.
    In 2008, complex financial instruments that almost no one understood — based on various pools of shaky loans — inflicted huge losses on giant companies like Bear Stearns, Lehman Brothers and American International Group almost overnight. Those institutions didn’t realize their portfolios were toxic until financial sepsis had already set in. Worse, a series of financial relationships among those players and others, intended to reduce risk, ended up accelerating it.
    However, there is one clear and present danger to the financial system that almost no one seems to be discussing in public. In fact, multiple experts whispered about it to me and said they discuss it behind closed doors but don’t breathe a word elsewhere for fear of becoming the target of a presidential tweetstorm. So I’ll do it, at the risk of being called a peddler of “fake news.” I think the biggest danger of financial problems exploding into a worldwide meltdown involves … Donald Trump.
    No, I’m not talking about Trump’s economic and regulatory policies, which people can legitimately disagree about. I’m talking about the way Trump behaves. This is a guy with minimal impulse control, someone who makes up stuff on the fly, tweets it, publicly undercuts his subordinates, insults opponents and allies, and goes back on his word so frequently that no major player in the worldwide financial system is likely to trust him.
    Based on what I saw a decade ago, I feel comfortable telling you that if trust and cooperation between the United States and other major financial powers are lacking, relatively small problems could metastasize rather than being cured or, at least, treated.
    Let’s look at some of today’s financial problems, which I don’t think will cause a crisis because they’re, well, obvious.
    The first danger is that U.S. interest rates are on the way up, regardless of whether Trump succeeds in bullying the Federal Reserve into abandoning its rate-raising program. The Fed cut short-term rates, which it controls directly, to virtually zero a decade ago to stimulate the economy and boost the prices of assets, especially stocks. It also went to extraordinary lengths to force down long-term rates.
    Now, both short and long rates are going back up. A major reason: the increase in current and future federal budget deficits created by last year’s tax bill, which will require massive federal borrowing.
    Higher interest rates drive down the market value of existing bonds and hurt prices of houses and other assets. I don’t know where the stock market is going — who does? — but higher interest rates will exert downward pressure on it.
    Here are some other problems: House prices, especially in high-income areas and in parts of blue states targeted by last year’s tax legislation (which limited annual deductions for state and local income and real estate taxes to $10,000), seem to be weakening. Given that home equity is most people’s biggest financial asset, you can see why this is a problem. As is the fact that some mortgage lenders seem to be reducing down payment requirements and making riskier loans.
    Subprime auto loans are growing rapidly, possibly because they performed relatively well during last decade’s meltdown. Back then, subprime auto loans performed better than subprime mortgages, apparently because financially stressed borrowers realized that their lives could be devastated in an eye blink by having their car repossessed and being unable to drive to work, but it would take a lot longer for lenders to repossess their homes.
    Therefore, quite rationally, they gave car payments priority over house payments. Now, however, people seem to be taking out subprime loans for multiple cars, which could reduce their incentive to keep making payments if their finances hit the wall.
    Student loan debt is a huge, growing and widely recognized problem. But while it’s in crisis territory for many students and their co-signers, I don’t think it threatens the financial system.
    Corporate debt — especially from private-equity firms buying companies and from corporations trying to make predatory “activist investors” happy by going into hock to buy their own shares — is very high. And it’s having an impact. Consider the collapse of private equity-owned Toys R Us, which couldn’t generate enough profit to cover its buyout debt. The tanking of Toys R Us has led to problems for landlords, who typically borrow heavily to finance shopping centers. And to mass layoffs. Dozens of other retail chains, most of them burdened by debt (which makes it far harder for them to compete with the likes of Amazon), are closing stores.
    That throws thousands of people out of work.
    Now, the Big However. Continue Reading...
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    Pradeep Kumar

    1 year ago

    I had foreseen 2008 crisis, but couldn't make a killing from that.
    I will not make that mistake now, -this time.
    I ready, meaning liquid and waiting.

    Trade war: US, China slap new tariffs on each other
    The US and China implemented 25 per cent tariffs on USD16 billion worth of each other's goods on Thursday, ratcheting up the trade war between the world's two largest economies.
    The latest trade escalation came as officials from both the countries met for tariff negotiations in Washington. So far, both the countries have taxed each other's goods worth $100 billion in total.
    The US imposed 25 per cent tariffs on another $16 billion of Chinese goods just after midnight. The tax targeted 279 Chinese products, including chemical products, motorcycles, speedometers and antennas, the US media reported.
    Beijing responded immediately with 25 per cent tariffs on an equal amount of American goods such as chemical products, diesel fuel, medical instruments, cars and buses.
    The Chinese Commerce Ministry said in a statement that it "has no other alternatives but to take counter measures".
    It added that it will file a complaint with the World Trade Organization (WTO). Beijing filed an initial complaint at the WTO in July during the imposition of Washington's first round of tariffs.
    China's Vice Commerce Minister Wang Shouwen is already in Washington for low-level talks, but hopes are not high that they will bring the dispute to an end, reports said.
    US President Donald Trump initiated the trade spat in July in an effort to punish China for what he says were unfair trade practices, such as stealing intellectual property. 
    In the first round of tariffs that month, Washington imposed taxes on Chinese goods worth $34 billion. Beijing had responded in kind.
    The second round of tariffs came despite testimony to the US Trade Representative's Office by dozens of US companies and industry groups. 
    Many said the new tax would hurt their businesses and warned that they would not be able to absorb another tax without raising prices for US consumers.
    Earlier, Trump indicated that he was ready to impose duties on over $500 billion of Chinese goods exported annually to Washington unless China agrees to sweeping changes in its intellectual property practices, industrial subsidy programmes and tariff structure.
    Beijing denies Washington's allegations and insists it adheres to WTO rules.

    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.


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