China’s trade with US shrinks as tariff war worsens

BEIJING — China’s trade with the United States is falling sharply as the two sides prepare for more negotiations with no sign of progress toward ending a worsening tariff war that threatens global economic growth.

Imports of U.S. goods fell 22% in August from a year earlier to $10.3 billion following Chinese tariff hikes and orders to companies to cancel orders, customs data showed Sunday.


Exports to the United States, China’s biggest market, sank 16% to $44.4 billion under pressure from punitive tariffs imposed by President Donald Trump in a fight over Beijing’s trade surplus and technology ambitions.

Beijing is balking at U.S. pressure to roll back plans for government-led creation of global competitors in robotics and other industries. The United States, Europe, Japan and other trading partners say those plans violate China’s market-opening commitments and are based on stealing or pressuring companies to hand over technology.

U.S. and Chinese tariff hikes on billions of dollars of each other’s imports have disrupted trade in goods from soybeans to medical equipment and battered traders on both sides.

Chinese exporters also face pressure from weakening global consumer demand at a time when Beijing is telling them to find other markets to replace the U.S.


China’s politically sensitive trade surplus with the U.S. narrowed to $31.3 billion in August from $27 billion a year earlier.

China’s global exports fell 3% to $214.8 billion, while imports were up 1.7% at $180 billion. For the first eight months of 2019, exports were off 1% from a year earlier and imports were down 5.6%.

China’s global trade surplus rose 25% from a year earlier to $34.8 billion. Exports to the European Union rose 3% from a year earlier to $38.3 billion.

U.S. and Chinese negotiators are preparing for talks in October, later than initially planned, but neither side has given any sign of offering concessions that might break a deadlock over how to enforce a deal.

Beijing says Trump’s punitive tariffs must be lifted once an agreement takes effect. Washington says some must stay to ensure Beijing carries out any promises it makes.


The decision to go ahead with talks despite the latest tit-for-tat tariff hikes on Sept. 1 encouraged global financial markets.

In their latest escalation, Washington imposed 15% tariffs on $112 billion of Chinese imports and plans to hit another $160 billion on Dec. 15. That would extend penalties to almost everything the United States buys from China.

Beijing responded by imposing duties of 10% and 5% on a range of American imports. More increases are due on Dec. 15 in line with the U.S. penalties.

U.S. tariffs of 25% imposed previously on $250 billion of Chinese goods are due to rise to 30% on Oct. 1.

China has imposed or announced penalties on an estimated $120 billion of U.S. imports. Some have been hit with increases more than once, while about $50 billion of U.S. goods is unaffected, possibly to avoid disrupting Chinese industries.

Beijing also has retaliated by canceling purchases of soybeans, the biggest single U.S. export to China.

The Chinese government has agreed to narrow its trade surplus with the U.S. but is reluctant to give up development strategies it sees as a path to prosperity and global influence.

Some analysts suggest Beijing is holding out in hopes Trump will feel pressure to make a more favorable deal as his campaign for the 2020 presidential election picks up. Trump has warned that if he is re-elected, China will face a tougher U.S. negotiating stance.

/atm

source: business.inquirer.net

In escalating trade war, US consumers may see higher prices

WASHINGTON  — The United States and China on Sunday put in place their latest tariff increases on each other’s goods, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer items before the holiday shopping season.

President Donald Trump said U.S.-China trade talks were still on for September. “We’ll see what happens,” he told reporters as he returned to the White House from the Camp David presidential retreat. “But we can’t allow China to rip us off anymore as a country.”

The 15% U.S. taxes apply to about $112 billion of Chinese imports. All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes. The administration had largely avoided hitting consumer items in its earlier rounds of tariff increases.

But with prices of many retail goods now likely to rise, the Trump administration’s move threatens the U.S. economy’s main driver: consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.

“We have got a great economy,” said Sen. Pat Toomey, R-Pa. “But I do think that the uncertainty caused by volatile tariff situation and this developing trade war could jeopardize that strength, and that growth, and that is, I think, that’s a legitimate concern,” he told ABC’s “This Week.”


As a result of Trump’s higher tariffs, many U.S. companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.

In China, authorities began charging higher duties on American imports at midday Sunday, according to employees who answered the phone at customs offices in Beijing and the southern port of Guangzhou. They declined to give their names.

Tariffs of 10% and 5% apply to items ranging from frozen sweet corn and pork liver to marble and bicycle tires, the government announced earlier.

After Sunday’s move, 87% of textiles and clothing the United States buys from China and 52% of shoes will be subject to import taxes.

On Dec. 15, the Trump administration is scheduled to impose a second round of 15% tariffs — this time on roughly $160 billion of imports. If those duties take effect, virtually all goods imported from China will be covered.

The Chinese government has released a list of American imports targeted for penalties on Dec. 15 if the U.S. tariff hikes take effect. In total, Beijing says Sunday’s penalties and the planned December increases will apply to $75 billion of American goods.

Washington and Beijing are locked in a war over U.S. complaints that China steals U.S. trade secrets and unfairly subsidizes its own companies in its drive to develop global competitors in such high-tech industries as artificial intelligence and electric cars.

“I give the president credit for challenging China on some of its really egregious behavior” on intellectual property and technology transfers, for example, Toomey said. He said he hopes that’s what Trump’s focus is, “not just the fact that Chinese clothing and shoes are popular among consumers. That’s not the problem.”

If China changes its behavior “in a meaningful way in that area … then we will have ended up in a better place. That’s what I’m hoping for. But let’s be honest. In the meantime, we’re doing damage. It’s a double-edged sword,” he said.

To try to force Beijing to reform its trade practices, the Trump administration has imposed import taxes on billions of dollars’ worth of Chinese imports, and China has retaliated with tariffs on U.S. exports.

“It’s a good thing taking on China. Unfortunately, he’s done it the wrong way,” said AFL-CIO President Richard Trumka said on “Fox News Sunday.”

“To take on China there has to be a multilateral approach. One country can’t take on China to try to dry up its overcapacity because they just send it through to you in other ways,” he said.

Trump has insisted that China itself pays the tariffs. But in fact, economic research has concluded that the costs of the duties fall on U.S. businesses and consumers. Trump had indirectly acknowledged the tariffs’ impact by delaying some of the duties until Dec. 15, after holiday goods are already on store shelves.

A study by J.P. Morgan found that Trump’s tariffs will cost the average U.S. household $1,000 a year. That study was done before Trump raised the Sept. 1 and Dec. 15 tariffs to 15% from 10%.

The president has also announced that existing 25% tariffs on a separate group of $250 billion of Chinese imports will increase to 30% on Oct. 1.


That cost could weaken an already slowing U.S. economy. Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2% annual rate, down from a 3.1% rate in the first three months of the year.

The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending. Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.

Americans have already turned more pessimistic. The University of Michigan’s consumer sentiment index, released Friday, fell by the most since December 2012.

“The data indicate that the erosion of consumer confidence due to tariff policies is now well underway,” said Richard Curtin, who oversees the index.

Some retailers may eat the cost of the tariffs. Target confirmed to The Associated Press that it warned suppliers that it won’t accept cost increases arising from the China tariffs. But many smaller retailers won’t have the bargaining power to make such demands and will pass the costs to customers.

Philip Levy, chief economist at the San Francisco freight company Flexport who was an adviser in President George W. Bush administration, said it’s hard to say for sure when the latest tariffs may hit U.S. customers in the form of higher prices.

But, he added, “If you had to pick a time to do it, this is the worst possible time” because it’s when the bulk of holiday goods are brought into the country.

source: business.inquirer.net

China minister says trade war with US would be ‘disaster’

BEIJING — China said Sunday that it will not initiate a trade war with the United States, but vowed to defend its national interests in the face of growing American protectionism.

“There are no winners in a trade war, and it would bring disaster to our two countries as well as the rest of the world,” Minister of Commerce Zhong Shan said at a briefing on the sidelines of China’s annual parliamentary session.

“China does not wish to fight a trade war, nor will China initiate a trade war, but we can handle any challenge and will resolutely defend the interests of our country and our people,” he said.

It was Beijing’s latest statement on “problems in Sino-US economic trade and cooperation,” alluding to President Donald Trump’s plan to impose heavy tariffs on imported steel and aluminum.

The US leader said Thursday that he was slapping tariffs of 25 percent on imported steel and 10 percent on aluminum, temporarily exempting big steel producers Canada and Mexico.

Chinese leaders have threatened in the past to retaliate against raised trade barriers, but have yet to take direct action following Trump’s announcement.

Citing Chinese researchers, Zhong said the US has been overstating its trade deficit with China by about 20 percent every year. He gave no details on how this figure was reached, but the US and Chinese governments generally report widely differing trade figures because Beijing counts only the first port to which goods go instead of their final destination.

The US reported a $375 billion deficit with China last year, so a 20 percent reduction would still be among the largest trade gaps that the US has with any country.

Zhong blamed the trade imbalance in part on controls over US high-tech exports to China, repeating a Chinese claim that Washington could narrow its trade deficit if it allowed China to buy more “dual use” technology such as supercomputers and advanced materials with military applications.

US officials have said such sales would make up only a few percent of the deficit while possibly threatening American national security.

The Trump administration earlier approved higher tariffs on Chinese-made washing machines, solar modules and some other goods, prompting Beijing to accuse Washington of disrupting global trade regulation by taking action under US law instead of through the World Trade Organization.

Liu He, Chinese President Xi Jinping’s top economic adviser, visited Washington earlier this month in an attempt to smooth strained ties.

Zhong said China would continue to “relax market access” to China and said China would also attach greater importance to intellectual property right, another point of tension with the US.

China absorbed $136.3 billion in foreign investment last year. The country has long been among the top global destinations for investment, but foreign enthusiasm is cooling. Surveys by business groups show companies are shifting emphasis to other Asian economies seen as more profitable or less restrictive.

“We have noticed that some foreign-funded businesses have complained about China’s investment environment,” Zhong said. “The fact that they have complaints indicates that they are still paying attention to China’s development and have confidence in China’s market.”

The commerce minister reiterated Premier Li Keqiang’s promise on Monday to liberalize the manufacturing industry and expand the opening up of sectors such as medical care, education and new energy vehicles. Specific details were not given, but Zhong pledged to give equal treatment to domestic and foreign businesses alike while continuing to curb “irrational overseas investment” from within China.

source: business.inquirer.net