US slams hefty new tariffs on China as NATO summit begins

US President Donald Trump fires barbs at both China and NATO.

Asian markets dipped as US President Donald Trump raised the pressure on Beijing in a trade war over its intellectual property practices by publishing a list of an additional $US200 billion worth of Chinese goods he plans to hit with a 10% tariff.

The US was expected to impose new tariffs targeting around $US16b in Chinese goods this week, and China had been expected to respond with similar duties. Beijing has not yet responded because it doesn’t import enough from the US to match the $US200b figure.

The new round of tariffs targets more than 6000 trade lines including a wide range of low-end manufactured products from handbags, textiles, tires, leather goods, ski gloves to refrigerators to TVs. Also on the list were farm products, seafood, building supplies and certain types of electronics.

In China, Hong Kong's Hang Seng index dropped 2% while the Shanghai Composite fell 1.8%. Japan's benchmark Nikkei 225 index shed 1.7%.

Beijing's Commerce Ministry called the new tariff list "totally unacceptable" and says China would impose countermeasures and file a lawsuit at the World Trade Organisation. The Chinese foreign ministry said Washington’s threats were “typical bullying” and described the dispute as a “fight between unilateralism and multilateralism.”

"China is shocked by the US move and the Chinese government, as always, will have to react to defend the core interests of our nation and people," the Commerce Ministry says.

House ways and means chairman Kevin Brady urged Mr Trump and Chinese President Xi Jinping "to meet soon face-to-face to craft a solution to establish a fair and lasting trade relationship between our two countries."

Senate finance committee chairman Orrin Hatch also expressed alarm.

"Although I have supported the administration's targeted efforts to combat China's technology transfer regime, tonight's announcement appears reckless and is not a targeted approach. We cannot turn a blind eye to China's mercantilist trade practices but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy."

The US tech industry and other business groups say they oppose the move even though the administration says the tariffs are to protect the US's technological lead and put pressure on China to stop bad practices.

"Trade is critical to economic growth and supports millions of jobs from Silicon Valley to the savannahs of the heartland,” Dean Garfield, chief executive of the Information Technology Industry Council, says in a statement.

No formal negotiations between the two economies are scheduled but the Office of the US Trade Representative (USTR) will hold a hearing on the proposed tariffs August 20-23 as part of a public comment period that ends August 30. A final decision will come sometime after that.

China's Ministry of Commerce is considering ways to use the extra revenue from its own tariffs on $US34 billion worth of US goods to mitigate the effects of the trade war on businesses and workers.

"In the process of determining which [US] products should be subject to retaliatory tariffs, the Chinese side has fully considered substitution for imported goods and the overall impact on trade and investment," it says, referring to a faster rollout of various economic and investment incentives and continuing assessments of the trade war's impact on a range of sectors.

Market reaction
Automobiles and home furnishing retailers are expected to be hit particularly hard by the new US tariffs because China supplies 65% of US furniture imports, according to analysts at Goldman Sachs.

The prospect of a 10% tariff on Chinese furniture imports sent shares of online home store WayFair Inc down nearly 4% while shares of Restoration Hardware fell nearly 6%. Shares of Advance Auto Parts Inc were down 1.6%, Autozone Inc fell 1.8% and O’Reilly Automotive almost 2%.

The Dow Jones Industrial Average fell 219.21 points, or 0.88%, to 24,700.45, the S&P 500 lost 19.82 points, or 0.71%, to 2,774.02 and the Nasdaq Composite dropped 42.59 points, or 0.55%, to 7716.61.

The dollar broke through the psychological barrier of 112 yen for the first time since January, rising as much as 1.3% to a top of 112.03 yen. Wednesday's strong flows into the dollar/yen trade continued a trend that began after the United States last week reported decent employment data and a pickup in wages.

Both the yen and the dollar act as safe-haven investments but analysts say the strength of the US dollar against the yen means investors have faith in the US economy rather than seeking safety.

The biggest losers were the offshore Chinese yuan, which slipped to an 11-month low, and the Australian dollar, which fell as much as 1.2%.

Copper lost 3.12% to $US6135.00 a ton. Three-month aluminium on the London Metal Exchange lost 1.41% to $US2060.50 a ton.

Brent crude futures tumbled, settling at $US73.40 per barrel, down $US5.46 or 6.92%. US crude oil futures settled $US3.73, or 5.03%, lower at $US70.38 per barrel.

NATO summit
Mr Trump criticised NATO allies’ military spending levels as he began his seven-day tour through Europe – one that starts with the NATO summit in Belgium and ends with a talk with Russian President Vladimir Putin in the Finnish capital of Helsinki.

“So, I have NATO, I have the UK, which is in somewhat turmoil, and I have Putin. Frankly, Putin may be easiest of them all. Who would think?” Mr Trump asked reporters yesterday at the White House.

The US president described UK Prime Minister Theresa May as facing turmoil and, when asked whether she should remain in power, he replied, “that’s up to the people.”

“NATO has not treated us fairly but I think we’ll work something out,” Mr Trump told reporters on the White House lawn, adding “we pay far too much, and they pay far too little … But we will work it out and all countries will be happy.”

“US doesn’t have and won’t have a better ally than EU,” European Council president Donald Tusk retorted in a message sent on Twitter. Mr Tusk added “we spend on defence much more than Russia and as much as China. I hope you have no doubt this is an investment in our security, which cannot be said with confidence about Russian and Chinese spending.”

“We are stronger together than apart,” NATO secretary general Jens Stoltenberg claimed in a retort to Mr Trump’s comments but the US leader countered by asking how the NATO alliance could be stronger when Germany is “making Russia richer,” referring to energy pipeline deals Berlin recently has signed with Moscow.

Germany’s energy spending “is a national decision,” commented Mr Stoltenberg, adding, “It’s not for NATO to settle that issue.”

One senior European official commented that NATO members are preparing for a worst-case scenario should Mr Trump repeat his threat to end or curtail defence cooperation, with allies not on track to hit their defence funding target of 2% of GDP by 2024.

Just as the US President arrived in Brussels, however, the UK government announced it will send an additional 440 troops to help support the NATO mission in Afghanistan.


9 · Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

9 Comments & Questions

Commenter icon key: Subscriber Verified

Whatever the right or wrongs Trump has a point that EU & Chinese trade practices with the US are not even closely equable so compromise is required by all sides and the US has the advantage of being able to impose tariffs on a greater amount of imports from the EU & China than vice versa so dialogue sooner than later will reduce the damage and loss of face. I suspect China will be the more pragmatic and the EU its usual devious obdurate self evidenced by the Brexit negotiations and Germany's internal turmoil due to Merke'ls refusal to acknowledge and action the damage economic migration is causing her country. This ain't going to end well and could turn very brutal.

Reply
Share
  • 0
  • 0

The trade deficits that USA runs with it's largest trading partners and it's massive domestic economy means the USA imposing import tariffs is a low risk, high reward strategy. Cutting internal taxation and raising tariffs is only taking the USA back to what was once a very powerful economy. Making America Great Again, Trump maybe maligned in many ways by the leftist mainstream but he does what he says, which is far more than most politicians.

No-new-tax-Jacinda and never-with-the-Greens-Winston spring to mind.

Reply
Share
  • 1
  • 0

Hear hear. Those two in comparison to Donald Trump are outright liars. But then the Left has always been comfortable with that just so long as it gets them into power.

Reply
Share
  • 0
  • 0

Trump is on a mission. It'll be an exciting week. While the Euros will be bleating the Chinese will be planning something. I'd never thought we'd get to this part of the game so quickly. Mind you, I'd never thought Trump had a chance of being elected, so what do I know. At least someone's got some balls.

Reply
Share
  • 0
  • 0

Agreed. Turns out all those years of "experts" saying this or that couldn't be done, or the way we're doing things is the only way, was just lack of imagination. Sometimes when I'm talking to these people, I think "really, this is high-tide mark of intelligence in our government structure?" The best people are in business, not the government.

I'm just glad Trump's got the confidence to try something different and risk some victory.

Reply
Share
  • 0
  • 0

Trump's attacks on Germany's NATO contribution are (sadly) right on the mark. Their armed forces a couple of months ago had only four combat capable aircraft. Their helicopter lift capability has been so corroded that they have to hire commercial helicopters to keep the pilots flying hours current.

The German army, once the second biggest in NATO now struggles to find a single company of operational tanks.

Ships and submarines can't go to sea because there are no spare parts left to repair them.

Officers who have bought this corrosive state of affairs to light have been fired.

From a respected analyst: "In 2010, aiming to reform her army into something more resembling an expeditionary force, Germany dropped conscription and began considerable reforms. Due to the Crimean Crisis that plan was put to a screeching halt halfway through though. Neither fish nor fowl, Germany's military is now trapped in some sort of limbo. Interventionists want an expeditionary force, constitutionalists want it to mount border defense only, pacifists want to abolish the army wholesale and traditionalists aim to bring back conscription for a menagerie of reasons. Each fraction is made concessions every now and again for political reasons. It's a clusterf*** of epic proportions, a giant money wasting machine."

Trump is right that the Germans are free-riding on NATO's collective security. Even now all they offer is a possible increase in spending after 2025.

Reply
Share
  • 0
  • 0

Meanwhile, back in the real world, the US Senate today voted 88-11 AGAINST Trumpelstiltskin's asinine and regressive tariffs, which are becoming a great concern to politicians looking out for the economy there. I don't know what to call that other than a landslide vote of no-confidence against the Great Orange One. Unfortunately, it was non-binding, but it just goes to show how much "support" he has for his moves.

When you have a Western leader hell-bent on firing shots at everyone the world over (other than quasi-dictator Poutine...) you really should be concerned about all the fire power that is going to be shot back at the world's largest economy.

Let's see where NBR commentators who support Trumpelstiltskin's tariff's are in 18-24 months from now with a cool trillion in tariff's floating around the world, and NZ in a deep recession...

Source: http://time.com/5336385/senate-approves-symbolic-resolution-trump-tariffs/

Reply
Share
  • 0
  • 0

After just 16 months in office, President Trump has me wondering . . . . . were any of the other Presidents even trying ??

Reply
Share
  • 0
  • 0

The Chinese were banking on this imbalance not being noticed and to fuel further expansion.
There is an expectation that Trump will throw in the towel regarding tariffs before Xmas. But, as Trump indicated, when you're half a trillion down (more like $800 billion) you can't lose.
And, as history has taught us when there is an expectation that problems will be over by Xmas, they very rarely are.
There is an expectation in China that the good times will keep on rolling. When they stop, expect trouble. When trouble happens, expect Taiwan to be in caught in the storm.
I think Trumps doing a great job. Most enjoyable presidency, ever.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.