Trade Wars: Trump loads first volley against China

The European Union is possibly as bad as China just smaller' Trump said on'Sunday Morning Futures on Fox News

Wang Shouwen, vice minister of commerce, said at a news conference in Beijing last week that China has not ramped up regulations to deter US imports.

Trump has threatened to impose new taxes on up to $416 billion worth of goods in coming months if China doesn't meet his trade demands. As an example, Chinese companies are reselling USA soybeans, and Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the United States in the year ending August 31, once the extra tariffs take effect.

China exported $34 billion worth of newly tariff-eligible goods to the U.S. a year ago.

"All we can do is adjust our supply chain here depending on the size of the price increases".

China is poised to fire the opening salvo in an escalating trade dispute with the United States by bringing in 25% tariffs on $34bn of USA goods a day earlier than Washington.

ANALYST'S TAKE: "We are now two steps removed from the worries of trade tensions as the tariffs deadline looms, locking equity markets in a lackluster trading tone", said Jingyi Pan of IG.

"China will not bow in the face of threats and blackmail", he added.

If Trump followed through on both threats, almost all of China's exports to the United States would be subject to tariffs.

For instance, Trump announced that the U.S. would expand the use of the Committee on Foreign Investment in the United States, which could limit Chinese investment in USA companies.

Chinese retailers told Reuters they probably would raise prices or spurn US imports for domestic substitutes, which could eventually hurt their businesses.

But economists also say the trade war comes as the period of synchronized expansion among the world´s largest economies, which is bolstering demand for U.S. goods and services, may be starting to run out of steam, raising the risks that tariffs could harm growth.

One U.S. manufacturer said Chinese authorities on average used to inspect 2 percent of the vehicles it sent overseas.

"We of course don't want to fight a trade war, but if any country's legitimate interests are harmed, then of course that country has the right to firmly protect their own interests", Lu said. Per NPR, the Trump campaign ordered so many more flags than the Clinton campaign in 2016 that Chinese locals near the factory joked that they knew the outcome of the election before anyone.

United States tariffs on a range of Chinese goods will come into effect at midnight on Thursday in what could turn out to be the first fusillade in a trade war between the world's two largest export nations.

A US industry source said: "There is a 99 percent chance that tariffs go into force on Friday".

Xi's government has expressed confidence China can hold out against US pressure, but companies and investors are uneasy.

China responded by threatening tariffs on $50 billion worth of USA exports to China, mostly aimed at agricultural goods.

"While the direct effects of trade sanctions will take time to be felt, the indirect effects of the rising risk of a major trade conflict can be transmitted quickly through deteriorating financial conditions and confidence".

The industry source said China had been unable to address the Trump administration's concerns about Chinese trade policies in at least five key areas, including forced technology transfers, Chinese industrial overcapacity, government subsidies, SOE reform, and Beijing's restrictions in the cloud computing industry.

A senior Western diplomat told Reuters that there was no sign of any talks at the moment between the two countries, even via back channels.

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