China says US$60bn tariff threat against US 'fully justified'

Eileen GuzmanAug 08, 2018

The deficits between the U.S. and Trump's main trade adversaries are also growing.

China on Friday said it will slap additional tariffs on about United States dollars 60 billion worth of American products in retaliation to President Donald Trump's plan to raise duty on USD 200 billion Chinese imports, escalating the trade war between the top two economies of the world.

President Donald Trump has made the reduction of the USA trade deficit one of the key measures of success in his trade fights with China, the European Union, and Canada. National Economic Council Director Larry Kudlow said in a Bloomberg Television interview Friday. "Those are the things that concern us the most".

Trump in a series of Tweet said the Chinese market dropped 27 per cent and still both the countries are talking.

The US move is being fuelled by deep frustration within the Trump administration over its unsuccessful attempts to press China to change its trade practices, including improperly obtaining American intellectual property.

There are also signs the Trump administration is trying to revive formal negotiations with Beijing.

The Chinese government has said that it will make a final decision on if, when, and how these tariffs will be implemented next month.

'The White House's extreme pressure and blackmail are already clear to the global community, ' said a Chinese state television commentary, according to Reuters. The difference is that while China is doing so in order to sell its products and thus gain a return on its investment, the USA is simply ploughing money into sectors partly ruined by its own foolish trading policies. Vaping advocacy groups plan to lobby the Office of the US Trade Representative. On Friday, U.S. data showed the merchandise trade gap with China widened slightly in June to $32.5 billion after May's $32 billion deficit.

Trump has said trade wars are "easy to win" and made the soaring US-China goods deficit a principal issue in his nationalist economic agenda.

The conflict with China is taking on a "cyclical" pattern with roughly two weeks of escalation followed by two weeks of relative calm, said Mark Rosenberg, chief executive at Geoquant Inc, a firm that uses computer models to gauge political risk. "No one has a real incentive to blink first".

Besides paying down the federal debt, Trump said tariff revenue would allow lower taxes on Americans, "At minimum, we will make much better Trade Deals for our country!"

China proposed retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas (LNG) to some aircraft yesterday, as a senior Chinese diplomat cast doubt on prospects of talks with Washington to solve their bitter trade conflict given current United States behaviour. Rather, the USA importers bringing the products into the United States pay the tariffs. On the other hand, Chinese central bank's efforts to bolster the tumbling yuan helped to stabilize the currency. Yet while the Chinese public and private sectors invest in one another based on the principles of the cyclically prosperous market socialist model, the USA is now being forced to subsidise (aka pay) its own farmers whose industry has been partly stagnated during the early stages of the trade war on China. Such sentiment may weigh on business investment, which contributed last quarter to the fastest pace of growth in four years.

The latest volley in the trade row between the countries comes as Chinese leaders gather in the coastal resort of Beidaihe near Beijing for their informal, annual summit to discuss the domestic, economic and foreign policies of the coming year.

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