Published: Mon, August 06, 2018
Finance | By Loren Pratt

Trade War: Trump says tariffs are working

Trade War: Trump says tariffs are working

China's state media said on Saturday (Aug 4) the government's retaliatory tariffs on US$60 billion (S$82 billion) in USA goods showed rational restraint, although in an opinion piece it still admonished the United States for blackmail and bullyboy tactics. Washington is expected to soon implement more tariffs on $16 billion in additional Chinese goods, which China has already announced it will match immediately.

The new China tariffs on the USA will impact metals, chemicals, and agriculture-related items.

President Donald Trump tweeted Sunday morning that his tariffs are "working big time" and made a weird claim that the money raised from these new import taxes will go a long way to helping pay down America's large debt. Every country on earth wants to take wealth out of the US, always to our detriment.

"This could be, I don't want to say 'catastrophic, ' but very, very painful for the industry", Snow said. China is expected to retaliate to the latest United States moves. The fuel now joins crude oil, certain refined products and coal on the list of US imports that may be slapped with duties of up to 25 percent.

In some ways, the addition of LNG to the list is symbolic. To put matters bluntly, the U.S. government is now facing the medium term possibility of paying its farmers to throw away foodstuffs while Chinese investment in its various domestic industries is used to help push Chinese goods to the forefront of innovation while helping Chinese products ranging from agriculture to industrial goods to reach foreign shelves.

On Friday, China announced it would impose additional tariffs on billions of dollars of American goods if Trump followed through on imposing additional tariffs on China. At about $70 a barrel, this was worth just below $4 billion, giving a potential annual trade of around $8 billion.

President Donald Trump and China have been engaged in a tense trade war for over five months. But crude oil represented one of the few areas where China could have realistically increased its purchases from the United States.

The president repeatedly mentions the USA trade deficit when talking about trade fights with China, the European Union, and Canada.

"If money leaves China - and the currency could be a leading indicator - they're going to be in a heap of trouble".

Unipec, the trading arm of China's largest refiner Sinopec, has suspended crude imports from the United States, Reuters reported on August 3, citing three sources familiar with the situation.

"We hear complaints from [Chinese] companies that USA clients have requested a suspension of orders and deliveries, but so far it has had only a limited impact on the industrial sector", he said.

China has overtaken South Korea to become the world's number two importer of the super-chilled fuel behind Japan.

US Treasury Secretary Steven Mnuchin called China's Vice-Premier Liu He last week in a bid to persuade Beijing to approve US chip maker Qualcomm's takeover deal of Netherlands-based NXP Semiconductors, the Post reported.

Canada's global trade deficit, for instance, shrank to $481 million in June, down from $2.1 billion the month before, according to Statistics Canada.

No cargoes at all have yet been booked for September, raising the possibility that China's imports of U.S. LNG will drop to zero, even though any tariff action still has to be implemented.

Similar to crude oil and LNG, coal was another area where Trump could have made a difference to USA exports to China.

The dispute is part of broader USA complaints about global trading conditions that have prompted Trump to raise duties on steel, aluminum, washing machines or solar panels from Canada, Europe, Japan and South Korea.

However, with the price of Australian thermal coal reaching 6-1/2 year highs, above $120 a tonne, US exports of this type of fuel used in power stations would have been competitive.

China kept the world's No. 2 stock market status for four years.

It is indeed due to the lack of meaningful consultation between China and the US that Beijing has chose to elevate the stakes in a manner that is directly reflective of Donald Trump's unwillingness to negotiate a new era in Sino-US trading relations on a win-win model.

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