Wall Street economists show trade war spillover effects
- Author: Leroy Wright Jul 13, 2018,
Jul 13, 2018, 13:58
China on July 12 said foreign firms operating in China would suffer in a trade war, urging US companies to lobby their government to protect their interests, and said no talks to end the impasse were now under way.
Calling Washington's behavior irrational, Beijing warned that the U.S. is, in the first instance, hurting itself with protectionist measures and constant attacks on free trade.
Lighthizer said the initial $50 billion in US tariffs were aimed at goods that "benefit from China's industrial policy and forced technology transfer practices".
The Wall Street Journal, citing unnamed Chinese officials, said Beijing was considering steps including holding up licenses for USA companies, delaying approvals of mergers involving US firms and stepping up border inspections of American goods.
LoCascio and her colleagues used to be upbeat about American whiskey's long-term export growth in China, which a year ago further lowered its tariffs on whiskeys and brandies to 5 percent as part of a wider effort to lower tariffs on a range of consumer goods imports.
China's imports of US goods are so small that Beijing "cannot match fresh USA tariffs", said Vishnu Varathan of Mizuho Bank in a report.
It also includes consumer goods ranging from vehicle tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
In his statement, Lighthizer claimed that the United States has specially targeted those Chinese products that "benefit from China's industrial policy and forced technology transfer practices", and China's retaliation - from Washington's perspective - was "without any global legal basis or justification".
The American announcement came Tuesday - days after the USA began adding 25 percent tariffs on $34 billion of Chinese goods. So far, the USA has raised tariffs, or import taxes, on shy of $40 billion of Chinese goods and it might be quintupling that before the end of September. But they show how rapidly this trade war can expand.
Hong Kong lost 1.3 per cent and Shanghai ended off 1.8 per cent, while Seoul shed 0.6 per cent and Singapore gave away 0.9 per cent. Sydney retreated 0.7 per cent, while Jakarta was also sharply lower.
The Dow Jones Industrial Average fell 200 points with Caterpillar DowDuPoint and Chevron being the biggest markets to plunge.
Global investors have mostly looked past the intensifying trade fight between the US and China, even as the countries move to deploy tariffs on hundreds of billions of dollars in goods.
Beijing is running out of American goods for retaliatory tariffs due to its lopsided trade balance, which means it might impose other measures.
As well, the American Chemistry Council urged President Donald Trump to "bring an end to this unnecessary trade war".
The action was announced by U.S. Trade Representative Robert Lighthizer on behalf of President Trump.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay.
Both the yen and the dollar are favored as safe-haven investments, but the strength of the greenback suggests investor faith in the US economy rather than a bid for safety. Tariffs are taxes on consumers and businesses.
Fresh US tariffs would also come at a time when the Trump administration is seeking Beijing's help reining in North Korea's nuclear-weapons programme.