China accuses Trump of 'blackmail' after new tariffs threat
- Author: Zachary Reyes Jun 21, 2018,
Jun 21, 2018, 23:48
Trade war concerns weighed on Wall Street after President Donald Trump directed U.S. Trade Representative Robert Lighthizer to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.
Oil fell ahead of a possible increase in OPEC crude supply and due to the trade dispute, as it was hurt by the rising dollar and China has threatened to impose tariffs on USA crude exports.
Fortunately, the U.S. and its global trade partners have learned a lesson from this experience...until the Trump administration. The Shanghai Composite Index fell 3.8 percent and Hong Kong's Hang Seng lost 2.8 percent. Apple was down 1.9 percent at $185.20 in afternoon trading in NY.
Trump threatened to pursue additional tariffs on another $200 billion worth of goods if China increases its tariffs yet again. In a forceful statement, it said Beijing was ready to "defend the interests of the Chinese people and enterprises". China doesn't import enough goods from the U.S.to match the scale of Trump's proposal but could adopt other methods.
The contribution of the Chinese factories in this process is estimated to be only 3.6% of the shipping price, yet USA trade statistics attribute 100% of the value of imported iPhones to China and so hugely overstate the size of the U.S.
China accused the United States on Tuesday of "extreme pressure and blackmailing" and vowed to retaliate after U.S. Trump threatened to impose a 10 per cent tariff on $200 billion USA of Chinese goods in addition to $50 billion of import duties that had already been announced.
There are few companies with more to lose than Apple in a trade war between the United States and China.
Steel stocks turned in some of the market's worst performances on the day, as traders anxious about the potential impact of a trade war between the US and China. Surely, a US-China trade war will have an adverse impact among their trading partners, including the Philippines.
"That seems to open up a new front", Parker said. US officials argue that this program unfairly discriminates against USA and other foreign companies operating in China.
"It's a confluence of trade fears and trade assumptions, as well as the Fed decision that happened last week", said Mokhtari.
Economists warn Washington might be undercutting its negotiating position by alienating potential allies. Jimmy Goodrich, vice president of global policy for the Semiconductor Industry Association, said chipmakers could be forced to pay tariffs on their own products simply for doing a small portion of the work in China. Soybeans, which are on Beijing's list of United States goods to retaliate against, fell to their lowest level in more than two years.
Smaller, more USA focused stocks were doing better than more internationally-focused US stocks, said Mokhtari. The total number of goods imported to the United States from China in 2017 amounted to around $505.6 billion.
That prompted a sharp response from Beijing, with China's Commerce Ministry accusing the United States of "extreme pressure and blackmail".
Asian trade-reliant economies and companies plugged into China's supply chains are anxious that they will suffer collateral damage if world trade slows down, hurting global growth and dampening business confidence.
In the separate dispute about steel and aluminium tariffs, he also has to contend with the politically targeted retaliation that other countries such as Mexico, Canada and the European Union have in hand, meant to hit important states in the mid-term elections.
The president also said Canada "treats us horribly".
The numbers "suggest a broad-based slowdown is now emerging, and we expect this to continue", said Louis Kuijs, head of Asia economics at research firm Oxford Economics.