Trump raises risk of economically harmful US-Chinese trade war

Scott Sinklier  Newscom

Scott Sinklier Newscom

Trump threatened to pursue additional tariffs on another $200 billion worth of goods if China increases its tariffs yet again.

U.S. President Donald Trump launched another trade tirade against Canadians, accusing them Tuesday of sneaking their American shopping back home - all because of what he calls "massive" tariffs on American goods.

The benchmark index of Chinese stocks fell nearly 4 percent, other Asian share markets declined and USA equity futures traded lower, while safe havens including the yen, gold and Treasuries climbed.

The Dow Industrials and S&P 500 fell more than a percent, but the losses in Asia were more severe.

Given the escalating rhetoric on trade, some investors said the slide in US stocks was relatively small. China doesn't import enough goods from the match the scale of Trump's proposals, but could sanction USA products or companies through other means. Stocks tumbled almost 3 percent in Hong Kong, 2 percent in Tokyo and 4 percent in Shanghai.

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Mr Trump added: "These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced".

"This practice of extreme pressure and blackmail deviates from the consensus reached by both parties on many occasions and is disappointing for the worldwide community", the Commerce Ministry said in a statement.

"If the USA loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures", according to a statement from the Ministry of Commerce. That would leave about $120 billion available for a tariff hike, falling short of Trump's $200 billion target.

That deadline has been extended several times as Canada and Mexico struggle to accommodate far-reaching US demands for change, such as a sunset clause that would allow one nation to pull out after five years.

And U.S. companies have an increasingly sizable stake in the fast-growing Chinese market. If the President is concerned about treating American footwear companies and consumers fairly, then he should have signed the TPP to lower footwear costs in America.

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The moves could start to meaningfully slow US growth, economists warn. Additionally, the U.S. president could be thinking that China will soon run out of USA imports. Beijing matched those tariffs in early April, implementing duties on a handful of USA steel, aluminum and agricultural products.

A day after Mr. Trump announced he was drawing up a list of possible tariffs on $200 billion worth of Chinese goods, the president told small-business owners that he seeks a level playing field for them to compete internationally.

U.S. President Donald Trump delivers remarks at the National Federation of Independent Businesses 75th Anniversary Celebration in Washington, U.S., June 19, 2018.

Foreign Affairs Minister Chrystia Freeland told the Commons worldwide trade committee that the "absurd and insulting" US action will meet with a firm response. Even if Trump goes through with the 10%, $200 billion tariff, which very well may not happen, USA taxpayers would face a tiny burden at most.

Trump has persistently slammed Chinese trade practices, calling them unfair.

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"He's upping the ante", Wendy Cutler, a former USA trade negotiator who is now at the Asia Society Policy Institute, said of Trump.

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