Trade War with China

Following this topic is like watching a slow motion car crash.

We all know what the Chinese response was going to be, but Trump either doesn’t know or doesn’t care, so while the the trade war is still largely only on paper for now, there is a glacial inevitably feel to it all.

I hope I am wrong, but it feels like the global economy is in for some rough times ahead.

plawolf said:

Following this topic is like watching a slow motion car crash.

We all know what the Chinese response was going to be, but Trump either doesn’t know or doesn’t care, so while the the trade war is still largely only on paper for now, there is a glacial inevitably feel to it all.

I hope I am wrong, but it feels like the global economy is in for some rough times ahead.

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His eyelids are slow.

Whatever talks that are going to take place will be arduous and either side will give in as little as possible. But the damage has been done to the stock market. Dow Jones' peak may not be visited again.

right now pretty high on us.cnn.com is
How tariffs on China could make your life more expensive

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(I looked again and it's the first of 'Top stories', on top of the mid panel)

now I read
China strikes back at U.S. unilateralism with equal tariff plan
Xinhua| 2018-04-04 23:58:49

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China on Wednesday unveiled a list of products worth 50 billion U.S. dollars imported from the United States that will be subject to higher tariffs, including soybeans, automobiles, aircraft and chemical products.

The decision was made by the Customs Tariff Commission of the State Council, involving a possible additional tariff of 25 percent on 106 items of products under 14 categories, the Ministry of Finance (MOF) said on its website.

The move was taken after the U.S. administration announced a proposed list of products subject to additional tariffs, which covers Chinese exports worth 50 billion dollars with a suggested tariff rate of 25 percent.

"The date of implementation will depend on when the U.S. government imposes the tariffs on Chinese products," the MOF said.

PRODUCTS INVOLVED

The U.S.-proposed list covers approximately 1,300 products imported from China from industries such as aerospace, information and communication technology, robotics and machinery, the Office of U.S. Trade Representative said in a statement.

The proposed tariff list is based on a Section 301 investigation into alleged Chinese intellectual property and technology transfer practices launched by the U.S. administration in August 2017.

In response, China's list includes a wide variety of agricultural products such as soybeans, corn, beef, orange juice and tobacco.

U.S. soybeans sold to China account for 62 percent of its total soybean exports, with 32.85 million tonnes of soybeans exported to China in 2017, or 34.39 percent of China's total imports, Vice Finance Minister Zhu Guangyao said at a press conference.

While U.S. farmers can get the benefits from healthy Sino-U.S. economic ties, the export amount to China was "too big," he said.

Chinese farmers have petitioned industry associations, claiming that U.S. subsidies hurt the interests of Chinese soybean growers, and China must respect its farmers' demands, Zhu said.

"That's why soybeans became one of our choices as a countermeasure," he added. China was forced to bring forward the product list, and there are grounds for the specific items and their order on the list, Zhu said.

A range of chemicals and automobiles, as well as certain aircraft, will also be subject to the tariffs, according to the list.

The Boeing 737 narrow body jet falls under the description and may have to face additional tariffs when entering China.

Boeing's shares plunged more than 4 percent in premarket trading Wednesday.

REACTION WITH "RESTRAINT"

"Disregarding serious representations by China, the United States announced tariff proposals that are completely unfounded, a typical unilateralist and protectionist practice that China strongly condemns and firmly opposes," the Ministry of Commerce (MOC) said on its website.

The U.S. move was "an evident violation of rules of the World Trade Organization (WTO)," the MOC said.

Its measures "severely infringed on the legitimate rights and interests that China enjoys in accordance with the WTO rules, and threatened China's economic interests and security," the MOC said.

New tariffs China decided to impose on U.S. products were a reaction to "the emergency caused by the U.S. violation of international obligations," it added.

China has filed a request for consultations under the WTO dispute settlement framework over the U.S.-proposed list, the MOC said in a separate statement.

"China is an active participant, firm supporter and an important contributor in multilateral trade mechanisms," said the statement, citing an unnamed spokesperson.

"We hope and believe that the WTO dispute settlement body will deal with the case in an objective and just manner to safeguard rule-based international trade order," the spokesperson said.

The economies of China and the United States are highly complementary, and "cooperation is the only right choice for the two countries," the MOF said.

Since the two countries established diplomatic relations in 1979, bilateral trade has surged more than 230 times to 580 billion dollars in 2017, data showed.

"I have to say that we were forced to take countermeasures, and we have reacted with restraint," Vice Minister of Commerce Wang Shouwen told reporters.

Both countries should stay rational, enhance communication and manage differences in a constructive manner, according to the MOF.

They should seek constructive measures to deal with problems and challenges so as to bring bilateral economic ties back to a healthy and stable track, Zhu said.

China does not want a trade war, as there will be no winners, according to Wang.

"But we are also not afraid of it. If someone insists on starting such a war, we will fight till the end," Wang said.

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inside is this chart:

since I now read it, I post:
Trying to make sense of Trump's contradictory trade war tweets

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President Donald Trump wants you to know two important things in a very declarative tweet Wednesday morning on China:
1. "We are not in a trade war with China..."
2. "We cannot let this continue!"

The problem is that the defiance at the end of Trump's tweet basically contradicts and definitely undercuts the message at the beginning. If we aren't in a trade war, but we aren't letting this continue, what exactly is going on?
You'd almost forget that a month ago Trump said trade wars are "good and easy."
In the meantime, the US has threatened $50 billion in tariffs specifically on China and on Tuesday

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that would be targeted. China has answered with $50 billion in tariffs on the US and identified industries that would be targeted.

OK, not in a trade war.
Let's look at Trump's tweet in its entirety, which Trump posted at 7:22 a.m. ET, a little more than two hours before the stock market was set to open down sharply after China's latest response to the tariffs Trump decided to slap on the country.
"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!"
There's a lot going on there and it perfectly represents the treacherous position Trump has created for himself by simultaneously pursuing a policy of economic belligerence and also

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as his benchmark of economic success.
Trump followed up at 9:20 a.m. ET, 10 minutes before US markets opened, with this: "When you're already $500 Billion DOWN, you can't lose!"

Lose what, exactly, if we aren't into or entering a trade war?
And regardless of whether Trump is right about the larger point that the US economy can absorb any repercussions (is that his point?), that doesn't mean individual American workers and business owners won't feel a pinch if China carries through with its tit-for-tat promised tariffs on agriculture and auto industries. The larger economy might be fine, but what about that soybean farmer in Iowa?
Trump himself bragged back in early March (also on Twitter, naturally) that trade wars were no big whoop.
"When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!"

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new tariffs on steel and aluminum that would affect China. Later in March, he announced the additional $50 billion in tariffs that would target China in particular and focus on intellectual property. An aggressive move by the US followed by an aggressive Chinese answer.

In late March, after promising the $50 billion in tariffs on China, Trump suggested obliquely that everything would be OK.
"Trade talks going on with numerous countries that, for many years, have not treated the United States fairly. In the end, all will be happy!"
And there's some time to think about all this. The US won't go ahead with its tariffs for some months. It has public comment periods scheduled for May 15. And there are a lot of smart economists currently debating whether the two largest economies in the world firing off tariff threats at each other actually does constitute a trade war.
We'll let those debates continue. But if you simply look at what the President of the United States has said recently, you'd be left with these very conflicting ideas:
1. Trade wars are good and easy.
2. In the end, all will be happy!
3. We are not in a trade war now.
4. We lost the trade war long ago.
5. We can't let this continue!
6. There's nowhere to go but up.
Not all of those things

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$1 trillion of US debt and the US economy has been roaring. In those two regards, there is definitely somewhere for the economy to go that's not up.

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Jura said:

did they shout 'Fake!' at Monday at 7:49 PM
?

I think the official outlets either didn't bother or I missed it

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Don't think anyone would bother faking this sort of stuff. And it's not like none of us are unaware that there have been major efforts to absorb and learn (often from reverse engineering when possible) foreign technologies since before the J-7. The silly thing is some people make absurd conclusions based on this fact. I'm still wondering how the US is going to take action against this. It's not like anyone working on these programs in China will just simply comply. Also which particular US company is being hurt and by exactly how much? Seems like the current claimed numbers are completely unsubstantiated or based off broad and unfair assumptions. Although I'm sure many tech companies will lose out from IP theft but let's take a look at some case studies.

Read his book "The art of the deal" ..... is very clear ... nothing new of Trump .. You can't teach an old dog new tricks

Nobody win in trade war and what happened to rule based system so much quoted during the SCS dispute Well the international governing body of trade dispute settlement is WTO which the US help to create
So any complain against China should be broguht before WTO.But I guess the US won't do it because all the allegation of intellectual theft need proof and documentation which they dont have other than rumor
The other day we had discussion that not many farmer are afffected by this tariff.Wellwrong 300000 job is onthe line here


American soybean farmers are worried about their best customer.
China was the United States' largest buyer last year, gobbling up $12.3 billion worth of soybeans, according to the Department of Agriculture. But China is planning to make US farmers pay a 25% tariff to sell beans in the country in retaliation for



Chinese tariffs would hit farm states and more than

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. Illinois, Iowa, Minnesota, Indiana and Nebraska were the largest soybean producers in 2016, according to the Agriculture Department.

"For those farmers that are operating on thin lines of profit and credit and are already financially unstable, it easily has the ability to be the straw that breaks the camel's back," said Brent Bible, who grows soybeans and corn on 5,000 acres in Lafayette, Indiana. Bible is also a member of Farmers for Free Trade, a group that opposes Trump's tariffs.

China has "the ability to be stubborn for a lot longer than we can remain solvent," he said.



Tariffs would cause Bible to re-evaluate his planting strategy and possibly cut back on growing soybeans. "Do I want to plant a crop that looks more likely [to] lose money?" he wondered.

Soybeans are America's leading agricultural export, with $21.6 billion in sales last year. Nearly 60% of the beans went to China, followed by Mexico and Japan, according to Panjiva, a research firm.

American soybean production exceeds this country's demand for the crop, forcing producers to look overseas. More than half of the US soy crop is exported every year, according to the American Soybean Association, an industry trade group.

China has been an eager buyer.

Chinese companies buy raw beans from US producers and crush them up to use as a protein source in animal feed. The average soy bean seed is 36% protein, said Bill Nelson, an economist at Doane Advisory Services. Soybeans are also processed into cooking oil, used for diesel production and blended into foods like tofu and milk.

China is "trying to improve the diet of the average Chinese person. That has involved a phenomenal increase in the amount of protein meals they are consuming," Nelson said.

Farmers have benefited as China puts muscle on pigs, cows and chickens with the help of US soybeans. US bean exports to China have nearly tripled in the past decade to 32 million tons, according to the Agriculture Department.



But Brazil has overtaken the United States as China's largest soybean importer, and tariffs targeting American beans could widen Brazil's lead or boost Argentina, the third largest supplier to China.

Tariffs would make US beans less competitive to Chinese buyers and Brazil's crop more attractive. "World demand will remain roughly the same, but all these extra expenses will have to pass through," Nelson said. "Farmers are going to be the victim."

Brazil has already ramped up its crop for 2018, and its beans are slightly richer in protein than the United States' -- points that "likely underscore the Chinese government's confidence to retaliate," Barclays' Adam Seiden wrote in a note Wednesday.

Weather can influence soybeans' protein proportion, and Brazil has experienced warmer seasons, Nelson noted.

Kevin Scott, a fourth generation farmer in Valley Springs, South Dakota, said a 25% tariff to sell in China would lead to Chinese buyers offering lower prices for his beans. Scott estimated that would dent his annual profit by up to $100,000.

"We're at break even. We've not been doing extremely well for the last four years," Scott said in an interview. "There would be a lot of farmers that would have to quit what they do" if Chinese tariffs went into effect before peak demand begins in September.

Lower prices on soybeans might actually help major US protein companies, Aslam noted. Shares of Tyson Foods (), Hormel Foods (), Sanderson Farms () and Pilgrims Pride () all rose Wednesday.

But Scott said the tariff threat will rally farmers and growers to push back hard in Washington: "This will fire us up."



Advocates for the soybean industry are already sounding the alarm, and lawmakers in farm states hear it.

"Farmers and ranchers shouldn't be expected to bear the brunt of retaliation for the entire country. It's not fair, and it doesn't make economic sense," Iowa Republican Senator Chuck Grassley said in a statement. The Trump administration should "mitigate the damage it caused," Grassley said.

Chinese tariffs "will have a devastating effect on every soybean farmer in America," American Soybean Association President John Heisdorffer said in a statement.

The group said that a 40-cent drop in the price of soybean bushel futures Wednesday had cost farmers $1.7 billion in crop value.

For Bret Davis, a farmer in Delaware, Ohio, and a member of the trade group, that amounted to a $35,000 loss.

now I read
Spotlight: U.S. harms global trading system with tariffs -- experts
Xinhua| 2018-04-05 17:02:42

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Scholars and business leaders from around the world have blamed the United States for this week's escalation in trade tensions between Washington and Beijing that might affect some 100 billion U.S. dollars' worth of bilateral trade flow.

They say that U.S. unilateralism is harming multilateral global trade frameworks.

Under President Donald Trump's directive, the U.S. Trade Representative's office Tuesday unveiled a list of Chinese products on which it threatens to slap 25 percent import tariffs.

The list contained 1,333 items worth some 50 billion dollars in 2017, targeting mainly hi-tech and innovation sectors which China is committed to boosting over the next few decades under the state-led Made in China 2025 initiative.

Hours after Washington announced its proposed punishment, China hit back proportionally by rolling out its version of the list comprising 106 items involving key American exports to China, such as soybean, automobiles, aircraft and chemicals.

Beijing said it would slap a 25 percent duty on those products, also worth 50 billion dollars annually, as retaliation should Washington carry out its plan.

DISASTER FOR GLOBAL TRADING SYSTEM

The growing hostility between the world's two largest economies was triggered by the United States, which had not only ignored China's patience, but also showed insincerity.

In addition, Washington failed to take into consideration worries expressed by both the business community and academia that the exacerbating dispute may spiral into a full-blown trade war.

Klaus Wohlrabe, economist at Ifo economic institute based in Munich, Germany, said in a recent interview with Xinhua that Trump's tariff plan is a manifestation of unilateralism that will severely damage the multilateral mechanisms under the framework of the World Trade Organization (WTO).

He said while unilateral tariff measures may seem to gain the U.S. economy short-term benefits, they will have negative impacts on the economic well-being of the United States and other countries in the long run.

Trump's short-sighted policy, according to Wohlrabe, won't lead to a virtuous cycle of development and will see the international community renegotiate new multilateral trade agreements after a certain period of time.

According to a survey regarding the business confidence of 5,000 internationally active German companies, conducted by the German Chamber of Commerce and Industry (DIHK), 35 percent of them said they are willing to invest in the U.S. market in 2018, down from 37 percent the previous year.

"The new U.S. administration is causing uncertainties," said DIHK Deputy CEO Volker Treier about the result. "The protectionist trade policies could cut the international production chain," he added.

Zheng Yongnian, director of the East Asian Institute at National University of Singapore and a China expert, called the U.S. tariff measure a disaster for the existing global trading system.

The United States, Zheng said, does not intend to outright abandon multilateralism. Its dissatisfaction with international institutions like the WTO and the United Nations derives from the standpoint that multilateralism cannot serve U.S. national interests to the maximum and even harms them.

CALL FOR DIALOGUE

Despite Tuesday's announcement, the United States allowed 60 days, starting from March 22 when Trump signed the proclamation, for public feedback on the tariff proposal and didn't specify the exact date on which the measure will come into force.

Following the U.S. release of details on the tariffs, U.S. Treasury Secretary Steven Mnuchin said the administration "will continue to engage in discussion with China to address these issues of reciprocal trade," according to a Bloomberg report.

Meanwhile, the Chinese authorities said Beijing's tariffs will take effect when the U.S. side implement theirs.

"The date of implementation will depend on when the U.S. government imposes the tariffs on Chinese products," said a statement issued Wednesday by the Chinese Ministry of Commerce.

As both sides left open the door for communication, experts urged that talks for a negotiated resolution be held until it is too late to prevent global economic instability caused by a protracted downward spinning of China-U.S. commercial ties, which have become an increasingly vital component of the world economy.

"Escalation of countermeasures between China and the U.S. is not advised, as they are the two largest trading partners in the world," said Gamal Bayoumi, head of the Cairo-based Arab Investors Union.

In an interview with Xinhua on Wednesday, Gamal said, "We as developing states encourage dialogue and reject the use of world trade rules as means of protectionism and a ban on free trade."

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now I read
China requests consultation with US at WTO over steel, aluminum tariffs
Updated 2018-04-05 21:36 GMT+8

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China has requested consultation with the US under the WTO Dispute Settlement Understanding concerning Trump’s decision to levy blanket steel and aluminum tariffs on Chinese imports, said the Chinese Ministry of Commerce on Thursday.

On March 8, Trump announced that the US will impose a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962, with exemptions for Canada and Mexico.

“The US imposes the tariffs on some WTO members, including China, while selectively excluding some countries and regions. This practice is a serious violation of the non-discrimination principle of the multilateral trading system,” said the Ministry of Commerce.

"It also severely violates US’s tariff reduction commitments and the rules for application of safeguard measures under the WTO. And it undermines the legitimate rights and interests of China as a member of the WTO.”

In view of the US’s refusal to negotiate compensation, China initiated a dispute settlement procedure to defend its legitimate rights and interests.

Following China's request, a dispute settlement proceeding has been formally invoked.

Trump’s tariffs use the “national security” power provided for by Section 232 to justify “protectionism”, noted the Ministry of Commerce.

Although apparently intended to help US steel and aluminum makers, the tariffs could lower profits for US companies making everything from pickup trucks to canned soup, as well as increasing prices for consumers.

It is wrong to think trade deficits are always bad and Trump's zero-sum game view of trade is obviously distorted.

Section 232 has not been used in the US since the WTO was established in 1995.

The WTO allows a national security exemption from its rules, but it has never been used as a defense in a trade dispute.

A dispute involving so called “national security” would threaten WTO discipline, since other countries would probably follow suit and use it to justify their own claims to be exempt from the rules.

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