In response to US tariffs, China put $50 million of its own tariffs on US good. Trump did not like that and responded with a threat of $200 billion more tariffs.
CNBC reports Trump Fires Back at Beijing with Threat of New Tariffs on $200 Billion in Chinese Goods.
President Donald Trump has requested the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.
The new duties will go into effect “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” the president said in a statement provided by the White House late on Monday.
The move comes after the U.S. on Friday announced that it would impose a 25 percent tariff on up to $50 billion of Chinese products. Tariffs on an initial list of goods worth some $34 billion will kick in on July 6.
Monday’s proposed measure is in response to Beijing’s decision to raise tariffs on U.S. exports, the White House statement said.
Stupid is As Stupid Does
Chinese Tariff List Translated, 545 Items: US Farmers and Automakers Clobbered
Des Moines Register: “China Tariffs Could Cost Iowa Farmers Up to $624 million”
Not to worry. Trade wars are very winnable.
China’s prices will rise. US prices will rise.
We call this “winning”
Mike “Mish” Shedlock
China exports just under 500B of goods to the US. That is slightly less than 20% of their worldwide exports and somewhere between 3 and 5% of their GDP. I really doubt that China will blink as they know the US does not have alternative sourcing for much of those exports. So while Trumps taxes will reduce demand somewhat, it won’t bring China’s economy to its knees nor will it bring back (net) any US jobs.
Where will go the money collected?
In the end it is just a tax and the USA need money to pay their deficit.
Hello Mish,
Can’t help but wonder if Trump has the wider geopolitical implications with China in mind as he escalates this “trade war”. By shrinking their economy, it will curtail their military expansion. This is right out the the Reagan playbook when he squared off against Gorbachev in Reykjavik.
Everyone else has a “trade surplus” with America, because every other country has a capital account deficit with America. The former being nothing more than the mirror of the latter.
It has no significance on it’s own at all. Just another Newspeakian term. Useful for riling up the illiterates to cheer for Dear Leader, when he announces which country we have currently always been at war with.
Get rid of the capital account surplus, by stopping printing and debt growth, and the trade deficit is gone. Inevitably.
“Stupid is absolutely all it is. There are no exceptions. Because there simply cannot be any.”
Yes! Precisely!
It is stupid. Period. And furthermore, Stupid is absolutely all it is. There are no exceptions. Because there simply cannot be any.
Perhaps oil and gas prices willnow decline in the USA as China and other countries stop buying our oil exports? $4 gas in Calif. sucks.
June 17, 2018
China’s tariffs on U.S. oil would disrupt $1 billion monthly business
SINGAPORE (Reuters) – China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month.
In an escalating spat over the United States’ trade deficit with most of its major trading partners, including China, U.S. President Donald Trump said last week he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.
China said Friday it would retaliate by slapping duties on several American commodities, including oil.
Investors expect the spat to come at the expense of U.S. oil firms, pulling down the share prices of ExxonMobil and Chevron by 1 to 2 percent since Friday, while U.S. crude oil prices fell by around 5 percent.
….
Mish, haven’t you advocated here “want a change – vote for Trump”?
Realist said: “It’s worth noting that the US actually has higher tariffs than virtually every other developed country that they trade with.”
Is there a citation to back that statement up? The Washington Post does not agree. They ran a March 2018 story on US tariffs and trade barriers versus others and reported that the US does not have the lowest trade barriers as Peter Navarro and Trump stated, but it is not bad (Japan, Canada and Australia have lower weighted average trade barriers). They were only able to muster 2 out of 4 Pinocchios for Navarro claiming “The United States has the lowest tariffs in the world.”
A new term… Trade Trap. Trump loves free trade, patience grasshopper, this is a process. It was planned at least three years ago, when he announce his candidacy. I’d be careful about betting against him.
The Trap
https://www.zerohedge.com/news/2018-06-18/china-enters-trade-trap
The Statement
Well, we have a $10B trade deficit with Russia and so far no tariffs.
Has anyone considered that the trade war might be a smoke screen, just like Trump’s morning tweets soak up the entire 24-hour news cycle, allowing him to do whatever else he wants that day without press scrutiny. I have no idea what he is trying to draw attention away from, but, for example, is it possible that Trump’s companies/sectors are avoiding tariffs and/or benefiting from the tariffs that are being imposed? Has anyone looked for any other patterns in the sectors that are being affected or not affected?
He’s doing something! Finally someone is doing something. Life is not only material. So we suffer a bit, yet we get some principles back.
How many American jobs have been lost by the closure of 60,000 factories? How much intellectual American property has China stolen,, to our detriment? How much damage has China’s violation of WTO rules caused?
Trump didn’t get Kim Jong Un to the table by being nice. He turned the screws. 200 billion more in tariffs is another turn of the screw.
It’s not a trade war,it’s a boycott,trump wants chicoms gone,take there cheap shoddy junk and hit the bricks,he know Amerika has nothin really worth trading,dept,war and garbage has no real intrinsic value,trump knows china’s economy depends entirely on amerikans cashing the checks they get from the gov’t ,the handouts they get from the gov’t,the paychecks they get from the gov’t,the entitlements they get from the gov’t,the subsidies they get from the gov’t,goin to walmart and sending all of it to the chicoms,without those checks,china collapses (really quick)
LOL – it will not add up to anything positive. There will be a loss of US jobs as a result.
25% of $50B, and 10% of $200B, that adds up to $32.5B in new taxes to the federal government. Or, as they like to say, $325B over 10 years. Nice.
So the tit for tat war continues. China needs to figure out how to make this painful enough for US business that they start to retaliate politically and/or threaten job cuts. The Chinese should be able to endure for a while by subsidizing businesses harmed by tariffs, funneling money to them that would normally be earmarked for US treasuries.
In the meantime, consumers will get to pay more for goods. Not sure why Trump gets fanfare for these tariffs. If supporters really cared about average Americans, they’d be up in arms against the Fed and central bankers, not the Chinese.
“Stupid” is China — whose massive trade surplus with the US shows they have been winning this long-running trade war that prior administrations pretended was not happening. Huge trade imbalances are unsustainable. Recognizing that, the Chinese should start to reduce their tariffs towards the much lower general level of the tariffs the US imposes on China.
But the Chinese are counting on the their allies inside the US undermining the US Administration and forcing the US to back down and accept damagingly-unfair trade terms. That is how it has always worked in the past. Let’s hope the Chinese are making the mistake of fighting the last war.
China has a $300 billion/year trade surplus with America. Nearly every country in the world has a trade surplus with America. No wonder no one wants to change the status quo. We have been played the fools because…why again? But America is only at fault for not wanting to be the trade fool anymore.
The Fed has been working so hard for years trying to create 2% inflation. This may do the trick.
Why isn’t isn’t it “Stupid” when China (or Mexico, India, the EU, etc.) imposes tariffs on the US, but only when the US imposes tariffs?