U.S. impose new $200bn tariffs on China imports

U.S. impose new $200bn tariffs on China imports

European share markets followed Asian counterparts lower on Monday as investors took fright at news Washington was set to announce a new round of tariffs on Chinese goods.

Collection of tariffs on the long-anticipated list will start September 24 but the rate will increase to 25 percent by the end of 2018, allowing USA companies some time to adjust their supply chains to alternate countries, a senior administration official said.

He also warned that if China retaliated then the USA would "immediately pursue phase three" which would mean imposing further tariffs with taxes on another $267bn worth of Chinese products.

President Donald Trump's expected announcement of new tariffs on $200 billion in Chinese goods drew an immediate threat of reprisals from Beijing.

China is expected to further retaliate against the United States, and top officials have warned that could include penalizing U.S. companies that rely on Chinese components for phones, cars, televisions, and other products. "It is hard to see what the administration's vision of an endgame might be other than total capitulation by China to all USA demands".

Trump initiated the fight to punish Beijing for what he says are China's predatory tactics to try to supplant US technological supremacy.

Other officials who advise the country's leaders are suggesting China impose limits on the sale of parts and supplies needed by USA businesses, using "export restraints" to threaten their supply chains.

In anticipation of Trump's tariff announcement, major U.S. stock market indexes closed on a down note.

Trump has consistently railed against the US' enormous trade gap with China.

In announcing the latest levies on Monday, Trump hinted at that argument again, pointing to his "great respect and affection" for Xi Jinping, his Chinese counterpart, and raising the possibility of a negotiation.

After Apple's comments, Trump said in a tweet said that there was an "easy solution" for Apple to avoid tariffs.

Earlier Monday, White House chief economic adviser Larry Kudlow said at the Economic Club of New York, "We are ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations" to reduce trade barriers. The rand has fallen almost 10 per cent since the previous Monetary Policy Committee meeting in July and while the Reserve Bank does set a target level for the currency, the likely impact of the rand's decline on inflation could prompt the bank to lift the country's interest rate. "Business hates uncertainty. They'd rather have an imperfect trading relationship than this much chaos".

"For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies", said President Trump.

Initial reaction from the business community Monday was unfavourable. Additionally, the tariffs affect some non-bike specific items that the industry uses, including hand tools, nuts and bolts, and other machinery. However, without these tariffs, we will be facing an unfair disadvantage.

"If countries will not make fair deals with us, they will be 'Tariffed!'" While U.S. inflation has continued to rise steadily albeit modestly, firms across the country report lost businesses, layoffs and possible bankruptcies as input costs rise and exports fall. Beijing pushed back, slapping tariffs on $50bn worth of American goods.

The new import taxes begin next week and will rise to 25 percent at the end of 2018.

"Right now our top negotiator is on a plane to Geneva for a meeting on WTO reforms and the US-China tariff situation will be discussed there". Beijing's target list of U.S. goods to penalize was heavy on agriculture. "I think it's going to work out very well with China", he said. "There's no way around it".

"More generally, the direction of worldwide trade policy in the United States continued to be a source of uncertainty for the outlook for the world economy". While individual companies have complained about their operations being disrupted by material shortages or cost increases, growth remains strong and unemployment is approaching a half-century low.

"Given the diametrically opposing views Washington and Beijing have of their problems, this trade war is unlikely to get better before it gets worse - for them, or for any of us".

Beijing has rejected pressure from the United States to roll back plans for state-led development of Chinese global champions in robotics, artificial intelligence and other fields. "A lot of money coming in".

Trump also threatened to inflict more economic pain in the form of additional tariffs if Beijing takes any retaliatory action. Tariffs can be effective in narrow cases to offset government subsidies that create cheap exports to the USA and others to boost economic growth, a practice sometimes called "dumping", or to protect endangered domestic industries that have national or cultural importance.

The tariffs could create opportunities for Kiwi exporters, in both countries, Hwee Ang said.

The initial United States tariffs will reduce Australia's GDP by 0.3 per cent by 2022, according to modelling by KPMG - a $36 billion drop in economic growth over five years.

There are reports China is reducing exports by slowing down customs approvals and stepping up environmental and other inspections.

Business groups are pinning their hopes for defusing the standoff on talk that Trump and Xi could meet this fall on the sidelines of an worldwide gathering such as November's G20 summit in Buenos Aires, Argentina.

The trade war measures against China are only one expression of this process. It was not under Obama. "Now everything is subject to the president deciding".

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