US-China trade war

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US-China trade battle: Catch up here
by Rishi Iyengar   @Iyengarish
April 8, 2018: 2:57 PM ET

http://money.cnn.com/2018/04/08/news/economy/trump-china-us-tariffs-trade-timeline/index.html

April 2017 — Trump launches investigation into steel imports

August 2017 — Another investigation tightens the screws on China

January 2018 — First, solar panels and washing machines

February 2018 — Commerce Department proposes tariffs

March 9, 2018 -— Trump imposes tariffs on steel imports

April 2, 2018 — China hits back

Beijing imposes tariffs on US imports worth around $3 billion, including a 15% duty on 120 American products including fruits, nuts, wine and steel pipes and a 25% tax on eight others, like recycled aluminum and pork.

April 3, 2018 — US threatens to target another $50 billion in Chinese goods

Trump's next set of potential tariffs comes barely 24 hours after China's first retaliation. In response to the August 2017 investigation into Chinese intellectual property theft, the US Trade Representative proposes a 25% tax on close to 1,300 Chinese goods from the aerospace, machinery and medical industries.

April 4, 2018 — China warns of tariffs on another $50 billion in American goods

The Chinese government announces yet another set of retaliatory tariffs that nearly mirror the Trump administration's proposal a day earlier -- 25% on a range of products from the US, worth approximately $50 billion.

April 5, 2018 — Trump calls for targeting another $100 billion in Chinese goods

[Ayoshi]

* Trade War looms as U.S. hits China with tariffs

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From The Diplomat

US-China in the History of Trade Wars - June 13, 2018

Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Ilya Spivak – Senior Currency Strategist for DailyFX and commentator in leading publications including the Wall Street Journal, MarketWatch, CNN Money, and Reuters – is the 143rd in “The Trans-Pacific View Insight Series.”

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Identify key historical events that precipitated trade wars.

Trade disputes often reflect the broader geopolitical tensions of the day. For example, the Cold War marked distinct polarization in international trade relations around the “Eastern” and “Western” bloc boundaries. When it ended, the falling away of trade barriers between its opposing sides was a major tailwind for cross-border commerce.

https://manage.thediplomat.com/wp-content/uploads/2018/06/thediplomat-trade-developments-1900-present-info-002.jpg
Graphic by DailyFX


Here Come the US-China Tariffs - June 16, 2018

After months of threats and talks, the U.S. announces tariffs will take effect July 6. China is set to retaliate.

It’s official: the U.S.-China trade war will kick off on July 6. That’s the date U.S. tariffs on a lengthy list of Chinese imports will take effect, with China’s retaliatory tariffs are expected to launch the same day.

Back in April, the U.S. Commerce Department had announced that $50 billion worth of Chinese goods would be hit with 25 percent tariffs “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” June 15 marked the deadline for the United States to release its list of products to be targeted for tariffs, after a public comment process concluded. In that sense, today was also an important drop-dead date for calling off the trade war without any “casualties” (ie actual sanctions being levied).

Today’s announcement from the Office of the United States Trade Representative outlines tariffs on 1,102 products, generally focusing on “products from industrial sectors that contribute to or benefit from the ‘Made in China 2025’ industrial policy.” That includes products from the aerospace, ICT, robotics, and automotive sectors. In an attempt to minimize the impact on the average American, though, the list “does not include goods commonly purchased by American consumers such as cellular telephones or televisions.”

https://thediplomat.com/2018/06/here-come-the-us-china-tariffs/

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Trade War begins: US and China exchange $34 billion in tariffs

https://www.cnbc.com/2018/07/06/trade-war-worries-us-china-tariffs-to-kick-in-on-friday.html

President Trump's tariffs on $34 billion worth of Chinese goods kick in, escalating a war of words between the world's two largest economies into a full-blown trade conflict.

Washington's 25 percent duties went into effect at midnight EDT and affected products such as water boilers, X-ray machine components, airplane tires and various other industrial parts.

China immediately retaliates with tariffs on its $34 billion list of goods issued last month, including soybeans, pork and electric vehicles.

Beijing calls it the "biggest trade war in economic history."

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China is feeling the pain

China economic growth slows to 6.7% in second quarter

July 16, 2018, 10:56 AM
By Agence France-Presse

https://business.mb.com.ph/2018/07/16/china-economic-growth-slows-to-6-7-in-second-quarter/

Chinese growth slowed slightly in the second quarter as the world’s number two economy faced a snowballing trade fight with the United States.

The economy expanded by 6.7 percent in April-June, down from 6.8 percent in the first quarter and in line with a 6.7 percent rate tipped in an AFP survey of economists.

Despite the quarterly deceleration, growth was still higher than the annual target of around 6.5 percent set by the government.

China faced an “extremely complex environment both at home and abroad”, said Mao Shengyong, a spokesman for the national statistics bureau.

The impact of the deepening trade conflict with the United States was yet to fully kick in, according to analysts, who added that Beijing’s battle to rein in pollution and spiraling debt levels had crimped growth.

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US to give farmers $12bn trade war bailout
1 hour ago

https://www.bbc.com/news/business-44945112

The Trump administration has unveiled a $12bn (£9.1bn) plan aimed at helping US farmers hurt by the intensifying trade war.

The aid is intended to protect the industry as countries raise taxes on US products such as soybeans in response to the president's new tariffs.

The US plans to provide subsidies to farmers and buy unsold crops, among other measures.

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In a speech on Tuesday, he said farmers would be the "biggest beneficiary" of the disputes after countries strike new trade deals.

But the agriculture industry, which draws about 20% of its income from exports, said the president's approach is hurting demand for its goods and causing long term damage to relationships with buyers.

Prices for soybeans have already fallen by more than 15% since April, when China - a major buyer of the crop - announced its plans to retaliate.

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Is China losing the trade war against America?
A weak Chinese stockmarket gives America the edge, at least in confidence

Aug 9th 2018 | SHANGHAI

https://www.economist.com/finance-and-economics/2018/08/11/is-china-losing-the-trade-war-against-america

WHEN Donald Trump tweeted on August 5th that tariffs were working “big time”, American media sprang into action to test the claim (see article). In China, editors were more circumspect. No major Chinese-language newspaper reported his tweets. One of his claims—that China’s stockmarket has fallen 27% in the past four months—was an exaggeration. But why would any self-respecting propagandist in Beijing dwell on that? Chinese stocks have indeed fallen sharply (see chart), which officials do not wish to emphasise.

And this is just one of a series of awkward facts for China as its trade war with America deepens. The yuan is down 8% against the dollar since April, and near its weakest in more than a year. A shrinking trade surplus produced a current-account deficit in the first half of 2018, China’s first such gap in at least two decades. More broadly, China’s growth is slowing at a time when America’s economy is expanding at its fastest pace since 2014. No wonder Mr Trump feels that he is on the right path, and that Chinese investors are jittery.

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[Ayoshi]

US, China Both Remain Defiant as Trade War Deepens | The Diplomat - September 20, 2018

Another $260 billion in total tariffs is set to take effect between the U.S. and China. Both sides are claiming they’ll be fine.

https://thediplomat.com/2018/09/us-china-both-remain-defiant-as-trade-war-deepens/

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Dow surges more than 400 points after Trump and Xi agree to pause the US-China trade war
Fred Imbert, John Melloy
Monday, December 3, 2018, 09:33AM EST
CNBC

https://www.cnbc.com/2018/12/02/dow-futures-surge-after-trump-and-xi-agree-to-pause-the-trade-war.html

Futures on oil and copper also jumped.

The U.S. and China agreed to hold off on additional tariffs on each other's goods at the start of the new year to allow for talks to continue for 90 days.

"Obviously there is a long way to go here, but the pattern of previous [Trump] deals is playing out," said one economist.

[Ayoshi]

Trade War Casualties: Factories Shifting Out Of China | Forbes

China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least $50 billion worth of goods, and another $200 billion likely by summer’s end, they are shifting their supply chain. It’s happening.

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For the last couple of years, China has been moving to a more automated assembly line, pushing lower-cost manufacturing to Vietnam and elsewhere. China is now one of the world’s largest producers of robotics used in manufacturing assembly lines. As the country moves up the value chain, old-school labor like stitch-and-sew apparel manufacturing is leaving the country.

Now that the tariffs are in place, with more promised, companies that were considering relocating are doing so sooner than planned.

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GDP growth remained largely solid at 6.8% in the first half, with retail sales and property investment holding steady. Now that the trade dispute is heating up, things are seen taking a turn for the worse. A slight weakening was spotted in June industrial output and investment, and worries have been on the rise that escalating trade tensions could bite into the economy in a couple of months. A full scale trade war, wherein Trump’s high-water mark of $500 billion in tariffs is reached, is forecast to take at least a half-percent off of Chinese GDP, based on research by Matthews Asia, a San Francisco-based mutual fund company.

Tariffs are hurting China.

The country is expanding imports steadily with some items heavily reliant on the U.S. market. For instance, China tariffs on soybeans are 25%. Chinese traders are now forced to either pay 25% more for American beans or go to Brazil and pay just about the same price even without the tariff. Brazil is always more expensive than the U.S.

In the next five years, imports are expected to hit $8 trillion, a potential boon to U.S. companies ... providing China lets them in.

https://www.forbes.com/sites/kenrapoza/2018/07/30/trade-war-casualties-factories-shifting-out-of-china/#203e069c103e

[Ayoshi]

Tech bosses warn of 'serious disruption' from US-China trade war | asia.nikkei.com - January 17, 2019

The business leaders' warnings came as Beijing condemned as "hysteria" a draft bill presented in the U.S. Congress to prohibit chip sales to Chinese companies found to have violated American trade sanctions and export controls. The draft legislation named both Huawei and ZTE, which was the target of a U.S. ban last year.

The company chiefs forecast that, even if Washington and Beijing settled the current tariff war, their long term economic and political rivalry could split global tech markets by forcing companies to choose between China and the U.S.

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US prepares to raise China tariffs; Beijing threatens retaliation
Trump says he's 'happy' to keep tariffs on Chinese goods as the two countries prepare to resume trade talks.
8 May 2019

US President Donald Trump said on Wednesday he would be happy to keep tariffs on Chinese imports, prompting Beijing to threaten retaliation, as the world's two largest economies prepared to resume talks to end a trade war that has roiled global supply chains and financial markets.

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In the meantime, the US government said in its official journal on Wednesday it would raise tariffs on $200bn of Chinese goods to 25 percent from 15 percent effective at 12:01am EDT (04:01 GMT) on Friday. Trump announced the plan on Sunday.

Separately, China's Commerce Ministry said it would respond in kind, adding that escalating trade frictions were not in the interest of either country or the world.

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Sweeping changes

The US is demanding Beijing make sweeping changes to its trade and regulatory practices, including protecting US intellectual property from theft and forced transfers to Chinese firms, curbs on Chinese government subsidies and increased American access to China's markets.

Trump also has sought massive hikes in Chinese purchases of US farm, energy and manufactured products to shrink a gaping US trade deficit with China.

But sources familiar with the talks said China's latest demands for changes to a 150-page document that had been drafted over several months would make it hard to avoid the US tariff rise on Friday. That increase would affect Chinese imports from computer modems and routers to vacuum cleaners, furniture, lighting and building materials.

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China Puts New Tariffs On $60 Billion Of U.S. Goods, And Stock Prices Reel
May 13, 20193:39 AM ET
LAUREL WAMSLEY
BILL CHAPPELL

https://www.npr.org/2019/05/13/722710640/trump-administration-ratchets-up-tariffs-so-far-without-retaliation-from-china

U.S. stocks fell sharply Monday after China retaliated for President Trump's latest round of tariffs. Here, a trader works on the floor at the New York Stock Exchange as a TV shows the state of the market.
Brendan McDermid/Reuters
Updated at 4:19 p.m. ET

China is imposing new retaliatory tariffs on $60 billion worth of U.S. goods, days after the Trump administration said it would impose higher tariffs on $200 billion in Chinese goods. The latest tit-for-tat exchange comes as trade talks have failed to yield a deal.

U.S. stock prices plunged on the news. The Dow Jones Industrial Average closed down 617 points Monday, or 2.4%, and the Nasdaq composite fell 3.4%.

China's latest tariffs will take effect on June 1, adding up to 25% to the cost of U.S. goods that are covered by the new policy from China's State Council Customs Tariff Commission.

The retaliation had been expected. Discussing the likelihood of China hitting back at U.S. imports over the weekend, Larry Kudlow, Trump's top economic adviser, said: "I reckon they will. We'll see what they come up with."

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Rare earths could be the next front in the US-China trade war. Here's what you should know
By Sherisse Pham and Julia Horowitz, CNN Business
Updated 2:23 PM ET, Thu May 30, 2019

https://www.cnn.com/2019/05/30/investing/rare-earths-china-trade-war/index.html

Hong Kong (CNN Business)As the trade war between the United States and China escalates, Beijing may be preparing to play a new card: its control of rare earth minerals.

Chinese state media this week issued a warning to the United States that it too has power over global supply chains. That coincided with a thinly veiled threat about rare earths, of which the country is a major exporter, from the government's top economic planning agency.
Here's what you need to know about rare earths, and how they could play into the trade fight.

What are rare earths?

Rare earths refer to 17 minerals with magnetic and conductive properties that help power most electronic devices. They are vital to the production of smartphones, tablets and smart speakers.

They are not actually "rare," and can be found in other countries — including the United States. But they're difficult to mine safely.
About a third of the world's rare earth deposits are found in China. Yet the country controls more than 90% of production, according to the US Geological Survey, in part due to its lower labor costs and less stringent environmental regulations.

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China prepares to strike back at US as Huawei suffers another loss
SoftBank snubs Huawei for 5G equipment while China mulls rare earths embargo

By Vlad Savov@vladsavov  May 31, 2019, 7:17am EDT

https://www.theverge.com/2019/5/31/18647021/china-us-trade-war-trump-huawei-rare-earths-embargo-softbank-5g-snub

The trade tension between the United States and China looks set to intensify soon, as the latter country is taking steps to respond to the American ban on doing business with Huawei. Bloomberg reports that China has put preparations in place to restrict exports of rare earth minerals to the US, while also setting up its own “unreliable entities” blacklist for unfavorable foreign companies. At the same time, Japan’s SoftBank has announced it’ll be building its 5G network with equipment from Nokia and Ericsson, snubbing Huawei, which had been a 4G supplier for the large mobile carrier.

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[Ayoshi]

China’s US Travel Alert: Weaponizing Tourism Amid the Trade War? | The Diplomat - June 05, 2019

The Chinese public may be more receptive to this sort of an alert particularly after May’s events in the ongoing economic warfare between the two countries. For instance, after the administration’s action against tech giant Huawei last month, nationalist Chinese netizens have rallied behind the company, which is seen as the crown jewel of China’s global high-tech competitiveness.

But there’s precedent to how the Chinese Communist Party leadership has used restrictions on tourism as a tool of geoeconomic leverage in the past. The most serious recent case was seen in how the Chinese state used restrictions on tourism as part of the unofficial sanctions on South Korea after Seoul assented to the deployment of the U.S. Terminal High Altitude Area Defense missile defense system in 2016.

Over the course of months, Chinese regulators took multiple steps to choke off Chinese tourist revenue in South Korea, where mainland Chinese accounted for some 47 percent of all tourists and 70 percent of duty free shop sales in 2016. A March 2017 decree from the Chinese National Tourism Administration also barred China-based tour agencies from offering package tours in South Korea. Official South Korean statistics showed a two-third drop in total Chinese tourist volume to South Korea by the summer of 2017, after the THAAD launchers had been delivered to South Korea.

China’s response to South Korea extended beyond the tourism sector and similar tactics may not be useful in the United States as a serious source of economic leverage. South Korea’s total economic exposure to China is much greater and the tourism sector especially so.

Beijing appears to favor the use of tourism restrictions in other places too. An effort to pressure Taiwan’s Democratic Progressive Party government by making cross-strait tourism more difficult is another example; Taipei weathered the decreased by increasing tourism from other parts of Asia.

https://thediplomat.com/2019/06/chinas-us-travel-alert-weaponizing-tourism-amid-the-trade-war/