Published: Thu, May 09, 2019
Money | By Ethel Goodwin

China makes statement on United States planned measures to raise tariffs

China makes statement on United States planned measures to raise tariffs

Donald Trump held out the prospect that China would make concessions at an eleventh-hour meeting in Washington but financial markets - unsettled by the most serious threat of protectionism since the 1930s - were downbeat about a breakthrough.

Thousands of Chinese products - including fruit, vegetables and manufactured goods - would be affected by a decision to raise tariffs, while the USA has indicated that it would also be prepared to target the $325b of imports that are not now subject to higher duties.

European and Asian equities and US futures slumped on Wednesday as traders, fearing a collapse of US-China trade negotiations, followed up Wall Street's rout on Tuesday and sold off riskier assets. Progress or failure on the twin agenda items stands to be a key selling point for his re-election or a sobering verdict on his unpredictable stylings.

Reuters, citing USA government and private-sector sources, reported on Wednesday that China late last week had backtracked on nearly all aspects of a draft trade agreement, threatening to blow up the negotiations.

On Sunday, Trump tweeted he would raise tariffs on $200bn worth of Chinese goods from 10 percent to 25 percent by the end of the week, and would "soon" target the remaining Chinese imports with tariffs, sending stocks and oil prices lower on Monday.

Trump said in another tweet on Wednesday that "China has just informed us that they (Vice-Premier) are now coming to the U.S.to make a deal". Trump threatened to raise tariffs on $200 billion in goods, and possibly add tariffs to another $325 billion.

The president made specific mention of former Vice President Joe Biden who is the leading Democratic contender in the race.

The president made protecting American manufacturers and farmers central planks of his 2016 candidacy, and his pledge to reverse the tide of globalization helped him win over voters in Democratic-leaning states like MI and Wisconsin. The US-China stand-off is reducing global trade and creating uncertainty for companies deciding where to buy supplies, build plants and make investments. A team of Barclays economists wrote in a note that if Liu did not come this would increase the likelihood that Trump would hike tariffs on Chinese goods.

Imports of American goods fell 26% from a year earlier to $10.3 billion. "We'll see what happens from there". They're our competition. They're competing with us for jobs. A similar tariff war past year had abated after the leaders of the two nations met in November 2018 and agreed to a truce. The Trump administration ended up providing up to $12 billion in aid to farmers affected by the trade skirmishes. However, the Times presents no reason to believe that, at root, Trump's decision is other than what his advisers say it is - a response to bad faith negotiating by China. "We need a positive resolution of this ongoing tariff dispute, not further escalation of tensions". Pat Roberts of Kansas, chairman of the Agriculture Committee.

On Monday, the USA president issued another threat to raise the tariffs on Chinese imports as part of an ongoing trade spat between the world's two biggest economies.

Despite the political fallout back home, senators seemed intent on not breaking ranks with the White House at this crucial moment in the trade talks.

"At some point, the president is going to figure out that they're not going to give him everything he wants", William Reinsch, a trade policy expert at the Center for Strategic and International Studies, said.

"I think this is a big masquerade by the administration".

Stock markets across Asia slumped again on Wednesday, as investors get increasingly nervous about the risk of a new U.S.

Nevertheless, the recent development of US-China trade talk came forth after earlier on Sunday (May 5th), the US President Donald Trump had declared that he would be hiking tariff on $200 billion of Chinese imports this week and would likely to aim Chinese products worth of hundreds of billions.

And there are indications that at least some Trump supporters are all for the president's confrontation.

The note said the comments from the United States "introduce fresh uncertainty about the near term trajectory: a real possibility that another round of tariff escalation is part of the endgame". That comes right in the middle of Liu's visit.

Trump will travel to Japan in late May after raising hopes for a new trade deal with Prime Minister Shinzo Abe.

Expectations were recently riding high that a deal could be reached but a deep rift over the language of the proposed agreement opened up last weekend. They don't want tariffs to go up.

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