Only 4 Days in, China-US Trade War Escalates

12 July, 2018, 13:44 | Author: Myra Gill
  • Soybean prices have fallen dramatically in recent weeks.
Daniel Acker  Bloomberg

On Tuesday the Trump Administration announced a large list of Chinese products that would be targeted with the next round of tariffs the government is threatening to impose. "We believe the U.S. measures interfere with economic globalization and damage the world economic order".

City traders will be trudging wearily to their desks this morning after last night's gripping World Cup drama, and worrying about the impact of a US-China trade war.

A survey by the American Chamber of Commerce in Shanghai found that most US businesses operating in China oppose the use of tariffs in retaliation for the challenges they face, from an uneven playing field to poor protection of intellectual property rights.

"China has no option but to fight fire with fire".

"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition", Lighthizer said.

Jack Gerard, Cal Dooley, and Edward R. Hamberger-the president and CEO of the American Petroleum Institute, president and CEO of the American Chemistry Council, and president and CEO of the Association of American Railroads, respectively-wrote in an opinion piece in the Washington Examiner published on Wednesday that the trade war is threatening the USA economy and could add "hundreds of billions of dollars in potential costs for American businesses - costs that could ultimately be borne by consumers". "There is no justification for such action".

China on Wednesday said that it would strike back against the US after the Trump administration announced it would impose another 10 percent tariff on $200 billion worth of Chinese exports.

Head of USA equity strategy at JP Morgan, Dubravko Lakos-Bujas, said: "Despite trade headlines, S&P 500 companies should deliver robust earnings on above-trend revenue growth and sharply higher margins". Imposing taxes on another US$200 billion worth of products will raise the costs of every day goods for American families, farmers, ranchers, workers, and job creators.


The U.S. Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but does not back Trump's aggressive tariff policies.

They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory.

The Retail Industry Leaders Association said new tariffs on Chinese imports would punish American families by driving up prices. Until January 2017, Ivanka's products were made in factories based in China and Hong Kong; around the time of Trump's inauguration, they appeared to make a well-timed exit and moved to other foreign factories, such as those in Indonesia, Vietnam, and South Korea.

"In part because they have only limited ammunition and in part because it's still early in the process on the USA side", Kuijs said.

The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years.

The US complains that China uses predatory practices in a push to challenge American technological dominance.

OCBC Bank in Singapore estimated that in a scenario where USA tariffs apply to $250 billion of Chinese goods, South Korea's GDP growth could be reduced by 0.3 percentage point while Japan's growth could be cut by 0.2 percentage point.

Beijing has said it would hit back against Washington's escalating tariff measures, including through "qualitative measures", a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

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