Donald Trump Raises Trade Dispute with China

Donald Trump at the White House on July 31, 2019.

The US president announced on Twitter Thursday 1st August 2019 that his administration would impose additional tariffs on imports from China.

Donald Trump again on Thursday 1st August 2019 fomented the trade war against Beijing, announcing its intention to extend additional tariffs to all imports from China, causing market amazement, worried about the impact on the market and the American economy.

In a series of tweets, the US president, who seeks a second term, said that his administration would impose, from the 1st September, “small additional tariffs of 10% on the $ 300 billion” imports Chinese until then spared.

“Imposing tariffs is in no way a constructive way to resolve economic and trade frictions,” Chinese Foreign Minister Wang Yi said in Bangkok after statements in a Chinese channel.

Falling stock markets

Donald Trump’s announcement was like a market bomb: oil finished with nearly an 8% drop in New York and Wall Street’s main stock indices ended in the red.

The reaction of the Asian markets was identical to the opening: the Tokyo Stock Exchange lost more than 2% Friday at 01:30 GMT and Chinese stock markets opened sharply lower, Hong Kong giving up 2.32% and Shanghai 1.63%.

Oil prices, however, resumed some colours: around 1:11, the barrel of US WTI rose 1.17% over the close on Thursday in New York, while the barrel Brent North Sea took 1.3%.

“I’m not worried” about the market downturn, Donald Trump assured reporters. “I was expecting it,” he added.

He also said that Chinese President Xi Jinping wanted an agreement but said he “was not going fast enough”.

Donald Trump also warned that he could further increase tariffs on Chinese products if Beijing did not accept US requirements. He mentioned the possibility of going “well beyond 25%”.

If these future taxes were actually implemented, all the imports coming from the Asian giant would be overtaxed.

Hot and cold

However, Donald Trump, who has not stopped blowing hot and cold in this conflict, says that discussions will continue as planned “early September.”

But China-US Economic Council (USCBC) chairman Craig Allen fears that this decision will lead the Chinese to abandon negotiations.

The host of the White House justifies his decision by the fact that Beijing did not hold in his eyes two very important commitments: massive purchases of American agricultural products and stoppage of sales of fentanyl, a very powerful opiate that makes havoc in the United States and of which China is one of the main producers.

Yet, Beijing said Thursday has bought in recent weeks more US agricultural products. And the negotiations between Americans and Chinese seemed to resume in a relatively peaceful climate this week in Shanghai.

On Wednesday, both parties reported “productive” talks in an attempt to end a trade war unleashed a little over a year ago.

“We did not see it coming,” responded Gregori Volokhine, an analyst at Meeschaert Financial Services.

Washington already imposes additional tariffs of 25% on more than 250 billion dollars of Chinese goods. Beijing countered by imposing additional tariffs in return on some $ 110 billion worth of US products.

Until then, the US administration had spared consumer goods so that the US economy, driven by household consumption, remained relatively immune to the trade war.

But the prospect of tariffs affecting all goods has caused market amazement. The Best Buy group, a chain of consumer electronics stores, dropped 9% immediately following the announcement.

The president “plays with fire,” warns Gregori Volokhine.

Donald Trump embarked on a tariff war against China to get Chinese authorities to end subsidies to state-owned enterprises, technology transfers imposed on foreign companies or “theft” of US intellectual property.

And he warned: he wants a “good deal” commercial or not at all. On Thursday, he went so far as to say that he could do without trading with China.

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