White House tells China to fix trade practices

Hugh Fox
August 6, 2018

Late on Friday, China's finance ministry unveiled new sets of additional tariffs on 5,207 goods imported from the United States, with the extra levies ranging from five to 25 percent on a total value of goods less than half of that proposed by U.S. President Donald Trump's administration.

The most recent threat from the Trump administration came this week, when it warned that it could impose steeper tariffs than originally planned on another batch of imports from China.

President Donald Trump will keep pressing China for trade concessions, a top White House economic adviser said Friday, as the Asian nation continued the tariff escalation by announcing further retaliatory actions against US goods.

Earlier this week, the United States president told his top trade official to study whether to raise tariffs on $200 billion in Chinese goods from a planned 10 percent to 25 percent. Those tariffs have already started to affect some businesses, though only a small fraction of the USA economy is experiencing consequences.

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The US has already imposed tariffs on Chinese goods worth $US34 billion ($A46 billion), with further tariffs on goods valued at $US16 billion expected to follow. The 25 percent duty would be applied to the proposed list of $200 billion of Chinese products announced on July 10.

The People's Bank of China will impose a reserve requirement of 20 percent on some trading of foreign-exchange forward contracts, according to a statement on Friday evening. "Trump is not just a businessman, he's actually a reform-minded leader ... now, the signs are there that the two sides will start talking again, but they will be cautious".

Separate releases recently showed growth in China's manufacturing sector slowing in July and one measure of United States consumer sentiment falling due to tariff concerns, according to media reports. Among the most critical targets are aircraft and liquefied natural gas (LNG). "The implementation date will be subject to the actions of the United States, and China reserves the right to continue introducing other countermeasures".

To date, only $34 billion in tariffs on China industrial imports to the U.S. has been actually implemented, plus another $2-$3 billion in intermediate steel and aluminium products.

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"They keep digging the hole deeper, violating the first rule of holes, which is when you're in one, stop digging", said William Reinsch, a trade expert at the Center for Strategic and International Studies who worked at the Commerce department during the Clinton administration. "Any talks in the future, should they happen, should be conducted on an equal and faithful basis". So far this year, the trade gap is up more than 7 percent from January-June 2017. The rise in per centage terms was the biggest since November 2016.

The US trade deficit increased in June, to $46.3 billion (R615 billion) from $43.2 billion in May, according to the US Census Bureau.

Many economists say that Trump's focus on trade deficits is misguided and that large trade deficits simply show increased domestic demand.

The Chinese Commerce Ministry said a decision to impose additional tariffs was made in response to U.S. plan to raise tariffs on Dollars 200 billion of Chinese goods from 10 per cent to 25 per cent, state-run Xinhua news agency reported. The government reported last Friday that trade contributed 1.06 per centage points to the economy's 4.1 per cent annualised growth pace in the second quarter.

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