Published: Wed, May 08, 2019
Finance | By Loren Pratt

President Trump Threatens to Escalate China Tariffs

President Trump Threatens to Escalate China Tariffs

President Donald Trump on Sunday threatened over Twitter to jack up tariffs on $200 billion in Chinese goods from 10 percent to 25 percent, as well as impose 25 percent levies on more than $300 billion in products imported from China.

Treasury Secretary Steven Mnuchin said China was "trying to go back on language that had been previously negotiated".

A spokesperson at the Chinese Embassy in Washington did not immediately respond to queries about the USA assertions.

However, tariffs, or perhaps just the threat of imposing them, may be a worthwhile temporary cost of negotiating a good trade deal with China.

Reports about China's intentions have varied over the last few days: The Wall Street Journal reported Sunday that China was thinking about canceling the talks, but CNBC reported soon after that China was still preparing to make a trip to the USA this week.

"China has fallen from the leading export market for U.S. agricultural products in FY2017 to the third-leading export market in FY2018 due to the retaliatory tariffs, according to the U.S. Department of Agriculture (USDA)".

"With the 2020 US presidential election season beginning to spin in the media, an impatient USA president is turning to bullying to try to push trade talks to a conclusion", said Carl Weinberg, chief worldwide economist with High Frequency Economics, in a research note.

This is part of a longstanding message that has come out of the sort of more hawky members of Trump's China team, that China has failed to live up to the promises that it's made for nearly 20 years now, nearly two decades now since joining the WTO in 2001.

The President said he may also impose duties "shortly" on US$325 billion of Chinese goods that are not now covered, a move that would hit virtually all imports from the Asian nation.

But recently it has adopted new laws, including a foreign investment law, and amended others, moves some see as efforts to tackle the concerns of the United States and other foreign investors, including those from China's largest trading partner, the European Union.

The market is vulnerable to any reversals in the trade talks between the USA and China.

The decision to send Liu to Washington as scheduled shows China "urgently hopes to reach an agreement", said Ma Hong, a professor at Tsinghua University's School of Economics and Management.

China forces American companies to hand over trade secrets if they want to do business there.

-China trade war probably wouldn't be good for AMD and Nvidia's financial results. We've never taken in 10 cents from China, and now we're taking in billions and billions of dollars. "Sorry, we're not going to be doing that anymore!"

During a 10-month U.S. Tech and industrial companies, which import a range of components and other parts from China, would feel the biggest impact from raising tariffs on Chinese imports, according to UBS.

In a separate commentary, the official Xinhua news agency called the US approach "regrettable" and said consultation was the "correct way" to solve trade issues. I think there was some thought here in Beijing - they were surprised at what the president said.

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