Economic Watch: US trade measures will backfire


Gao pointed out that China is an important supporter and participant in economic globalization and the global industrial chain, and many of its export commodities are products made by foreign enterprises in China.

United States soybean farmers have been particularly concerned, and the price of soybeans has plunged 17 percent over the past month on tariff fears.

Some Chinese ports had delayed clearing goods from the United States, four sources said on Friday. "The math is simple". But he commended Trump for directing the U.S. Department of Agriculture to give farmers "a safety net during this short-term uncertainty".

China's Foreign Ministry said on July 6 that it has already begun implementing tariffs on US goods in response to the 25 per cent USA tariffs.

Products of beans made by a USA company are displayed for sale at an global supermarket Jenny Lou's in Beijing, China June 29, 2018.

"American farmers want trade, not tariffs".

But the thing is some say the trade war started this morning, and in a war, it's not always calm or controllable or rational.

Previously, Trump had threatened up to impose additional tariffs on goods worth $400 billion should China follow through on its plans to retaliate against the initial U.S. tariffs on Chinese goods including autos, computer disk drives, pump and valve parts and light-emitting diodes.

Ahead of the 25 per cent additional tariffs taking effect yesterday at 12.01am Eastern Time in the US, or midday in Beijing, US President Donald Trump signalled that he was digging in for a long fight. The oilseed is the top agricultural commodity that the USA ships to China by far and is among the largest products for overall exports.

The Chinese Foreign Ministry said "retaliatory tariffs" also took effect, but provided no other details.

Trump and his advisers argue the tariffs are necessary to pressure China into abandoning unfair practices such as stealing intellectual property and forcing American companies to hand over valuable technology.

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China could either tie up these firms in red tape or encourage an effective boycott by Chinese consumers, experts said. That means United States apple prices could take a serious dive, costing growers money. Tracy Grondine, a spokesperson for the US Apple Association, said China is a market that has "significant growth potential" for US-based apple farmers.

"This will impact growers coast to coast", Grondine said. "Our models project only a modest increase in overall consumer inflation and a small hit to U.S. GDP growth".

A member of China's central bank monetary policy committee, Ma Jun, said Friday that the first punches will have a "limited impact" on the Chinese economy.

Daimler, the carmaker behind Mercedes-Benz, already warned last month that its profits will fall this year.

"The dynamic is different from anything we've seen", said Boughton. Daimler said those costs won't be completely passed on to customers.

China also has other ways to retaliate by going after USA companies such as Apple Inc. and Walmart Inc., which operate in its market and are keen to expand.

Several companies - including Total and Peugeot of France, and Russia's Lukoil - have said they are preparing to exit Iran before U.S. deadlines, the last of which is November 4. So many little parts for nearly everything are manufactured in China, and there can be a real holdup in manufacturing because of these tariffs.

Kennedy say he thinks the Trump administration's enthusiasm for the conflict "will erode as the economic pain and political fallout from a trade war begin to take hold".

U.S. Customs and Border Protection officials are due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

The administration accuses China of using predatory practices in a push to overtake USA technological dominance.

Correction: An earlier version of this article misstated the number of top soybean producing states that voted for Hillary Clinton in the 2016 election.