Despite Tariffs, China Will Not Reduce US Treasury Bond Holdings

Hugh Fox
April 7, 2018

He has argued that the United States is only proposing these tariffs as a negotiating position and will be happier to settle them through talks.

After placing new duties on pork products last week, this time the Chinese targeted another major USA farm export, raising tariffs on American soybeans. Asian stocks fell for a second day Tuesday amid jitters about U.S.

Any additional tariffs would be subject to a public comment process and would not go into effect until that process is complete. Only about 2.5 percent of all USA imports are affected by the tariffs.

Escalating his trade feud with China, President Trump ordered his administration Thursday night to consider adding another $100 billion worth of tariffs on Chinese products.

Trump later tweeted that "when you're already $500 Billion DOWN, you can't lose", in a possible reference to America's trade deficit with China.

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The US has a trade deficit of nearly United States dollars 500 billion with China. "We call on President Trump to engage the Chinese in a constructive manner-not a punitive one-and achieve a positive result for soybean farmers". The U.S. shipped some 33 million tonnes.

David Podruzny, vice-president business and economics at the association, said the impact will take awhile because most of the production is under contract. "Both sides benefit by positive solutions that lower barriers".

In a statement following the USA release of details on its China tariffs, Treasury Secretary Steven Mnuchin said the administration "will continue to engage in discussions with China to address these issues of reciprocal trade".

China countered Trump's plan announced on Tuesday to slap tariffs on 1,333 of the country's products - such as semiconductors and lithium batteries - by announcing duties on a variety of agriculture products, including soybeans, the second-most-valuable U.S. crop.

China retaliated Wednesday by announcing plans to impose levies on $50 billion worth of major USA exports such as soybeans, cars and small aircraft. And soya beans are produced in farming states like Iowa that voted for President Donald Trump in 2016.

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"In other words, this looks like a shot across the bow with regard to Boeing and our base case remains that we will see little change in Boeing aircraft deliveries into China", he wrote in a report.

China needed to respond to any protectionist measures from the U.S., said RaboResearch senior economist Hugo Erken. The agency said it chose products to minimize the impact on the USA economy and consumers. In March, the US put tariffs on imported steel and aluminum.

China has accused Trump of damaging the global system of trade regulation by taking action under USA law instead of the through the WTO. "This is no longer a hypothetical, and a 25 percent tariff on USA soybeans into China will have a devastating effect on every soybean farmer in America".

China's Made in China 2025 plan was announced in 2015, and highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power, from information technology to robotics and aerospace.

Brazil supplied about half of the almost 100 million tonnes of soybean imported by China past year.

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In the text released by the WTO, China's delegation requested "consultations" with Washington "concerning the proposed tariffs [and] measures that the USA accords to certain goods in various sectors including machinery, electronics, etc. originating in China".

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