European shares advance as US tariff suspension hopes boost autos
- Author: Leroy Wright Jul 07, 2018,
Jul 07, 2018, 15:02
China rejected "threats and blackmail" ahead of a threatened US tariff hike, striking a defiant stance Thursday in a dispute companies worry could flare into a full-blown trade war and chill the global economy.
Last year, Chinese consumers suddenly turned against South Korean retailer Lotte, which was forced to shut three-quarters of its shops in China after providing Seoul with land to deploy an American anti-missile shield that Beijing opposes.
There was no evidence of any last-minute negotiations between USA and Chinese officials, business sources in Washington and Beijing said. What galls them most is the president's justification: Using a little-used weapon in US trade law, he has declared that the imported metals are a threat to America's national security.
But if the issue is not resolved and Trump raises the stakes to tariffs on $ 800 billion imports from all major trading partners, everyone will feel the bite.
The US tariffs imposed so far would affect the equivalent of 0.6% of global trade and account for 0.1% of global GDP, according to Morgan Stanley.
China said it would respond with measures of a "corresponding number and quality" if the United States produced a list of products that could be hit.
Until now, only $3bn of tariffs have taken effect, but President Trump has threatened new tariffs on many occasions.
The steel and aluminum tariffs have drawn retaliation from a host of US trading partners.
Chinese and US flags are set up for a meeting during a visit by US Secretary of Transportation Elaine Chao at China's Ministry of Transport in Beijing, China April 27, 2018.
"I'm guessing we won't be sending as much pork to China", he said. Hardliners such as Peter Navarro, a trade policy adviser, says the United States is defending itself against an "aggressive" China.
One seller pointed out that exporters of US-made goods might be impacted through retaliatory tariffs.
Boeing sells a quarter of its planes in China, the second-biggest market in the world, and the U.S. aerospace giant is neck-and-neck with European rival Airbus.
The Chinese government previously said that it will impose tariffs of equal size on U.S. goods as retaliation and reiterated that retaliation would come soon. Since then, the sides have traded salvos, with the USA focusing its import duties on high-tech equipment while China has targeted products like cars, soybeans, and lobsters - many of which are produced in areas of the US that voted for Trump.
Some U.S. companies scrambled Friday to reach China before the tariff deadline.
Shaun Rein, managing director at the China Market Research Group in Shanghai, said the Chinese government's next play could be to stoke anti-American sentiments among consumers - similar to the boycotts it ordered a year ago on South Korea's Lotte Group, which caused dozens of the company's convenience stores to shutter.
The Chinese government also warned it would react immediately and strongly to new tariffs.
"I have told the president time and again 'trade, not aid, '" said Ernst. "We urge the two governments to come back to the negotiation table with the aim of having productive discussions based on achieving results - focused on fairness and reciprocal treatment - instead of escalating the current situation".
The statement reiterated that China "will unswervingly deepen reform, expand opening up, protect entrepreneurship, strengthen property rights protection, and create a good business environment for global companies in China " - an apparent response to the Trump administration's complaints.