Money: Trump's in love with the US-China trade war - markets feels differently - - PressFrom - Australia
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MoneyTrump's in love with the US-China trade war - markets feels differently

02:25  15 may  2019
02:25  15 may  2019 Source:   msn.com

Asian shares down on Trump tariff hike vow

Asian shares down on Trump tariff hike vow Asian equities fell and the yen strengthened as trade negotiations between the United States and China deteriorated on a tweet by US President Donald Trump.

Donald Trump might " love the position we ’re in" but financial markets , and US farmers, aren’t quite as happy about Over the weekend Trump raised the existing tariffs on $ US 200 billion (8 billion) of China ’ s exports from 10 per cent to 25 per cent and threatened new tariffs on a further $ US 325 billion.

WASHINGTON — A trade war between the world’ s two largest economies officially began on Friday morning as the Trump administration followed through with its threat to impose tariffs on billion worth of Chinese products

Trump's in love with the US-China trade war - markets feels differently© AP Last chance for a trade deal? Chinese President Xi Jinping will meet Donald Trump at the G20 meeting in Japan next month.

Donald Trump might "love the position we’re in" but financial markets, and US farmers, aren’t quite as happy about the Trump administration’s decision to ramp up the aggression in its trade conflict with China.

Over the weekend Trump raised the existing tariffs on $US200 billion ($288 billion) of China’s exports from 10 per cent to 25 per cent and threatened new tariffs on a further $US325 billion. China’s measured response was to lift the rates on its existing tariffs on $US60 billion of its $US120 billion of annual imports from the US.

Reports suggest China may cancel trade talks with the US this week following Trump's tariff threat

Reports suggest China may cancel trade talks with the US this week following Trump's tariff threat Trade talks between the United States and China, scheduled to resume in Washington D.C. this week, may be cancelled following threats made by US President Donald Trump via Twitter on Sunday, according to a report from CNBC.

Where Trump went wrong in the US - China trade war . It' s important to view the current trade war within the context of the Trump administration' s broader trade policy. For example, if we focus only on farming, the president negotiated the US -Mexico-Canada Trade Agreement which, if Congress does

We do not want to fight, but we are not afraid to fight a trade war .” He added that if the United Mr. Trump ’ s effort to raise the stakes on Thursday seemed poised to send financial markets spinning, with futures While Trump administration trade officials appear to have been operating with considerable

Trump's in love with the US-China trade war - markets feels differently© AP Markets tumbled on Monday as investors started to get jittery.

That caused the US sharemarket to fall 2.4 per cent, volatility to spike, the US bond yield curve to flatten in expectation of lower growth, and soy bean prices to slide to their lowest levels in a decade.

China’s tariffs are targeted to cause maximum political effect. They target agricultural products like soy beans as well as LNG and some consumer products. They avoid impacting goods that would hurt China’s own economy.

Unlike the across-the-board increases in the US tariffs, China’s will range from as little as 5 per cent to as much as 25 per cent, presumably to maximise their impact on the US while minimising the damage to its own economy. Unlike Trump, China’s authorities recognise that tariffs on imports are a tax on their own economy.

The Australian dollar is under pressure as US-Sino trade talks resume

The Australian dollar is under pressure as US-Sino trade talks resume The Australian dollar eased lower on Thursday, weighed down by caution ahead of trade talks between the US and China. 

US President Donald Trump has long accused China of unfair trading practices and intellectual property theft. In China , there is a perception that the Mr Trump ' s tariffs policy aims to encourage consumers to buy American by making imported goods more expensive. So far, the US has imposed

When President Trump rails against China , he says things like, “Our country is being taken advantage of,” or, “ We lost years And so the presumption was, China ’ s going to want to become like us , more market oriented.” China ’ s leaders have argued that they can outlast Mr. Trump in a trade standoff.

Trump's in love with the US-China trade war - markets feels differently© AP China's economy would suffer a huge hit from a protracted trade war.

They’ve also left the door open to a deal, deferring the imposition of the new tariff rates until June1.

Given how intractable Trump and the trade hawks around him have been, and the issues they regard as non-negotiable, however, that appears an unlikely outcome.

Stocks tumble around the world as trade-war deadline approaches

Stocks tumble around the world as trade-war deadline approaches US stocks slumped with markets around the world overnight as the hours ticked toward a midnight deadline in the next front on the US-China trade war. Tensions between the world's two largest economies are dragging down stocks from Mumbai to Milan as a deadline of today (2pm AEST) approaches, when the United States said it would impose more tariffs on Chinese goods. The worries about trade have halted what has been the hottest start to a year for US stocks in decades, and the S&P 500 index is on pace for its worst week of 2019.

Chinese President Xi Jinping said on Friday that China holds a "positive attitude" toward trade talks with the US , but would "fight" to get the best terms. "As we always said we don't want to start the trade war but we are not afraid," Xi said, responding to questions from representatives of the New Economy

The US - China truce merely buys both sides more time to negotiate. The White House says there will also be immediate discussions on issues such as intellectual property protection While Trump ’ s tough stance is popular with his Republican supporters, the US trade deficit with China has worsened.

The US is firm that its tariffs would remain in place until it is satisfied, unilaterally, that China is complying with its demands on trade.

It is demanding China buy sufficient US goods, regardless of whether it wants or needs them – or whether the US can actually supply them – to wipe out the US trade deficit with China.

Most significantly, the US insists that China legislate its agreement to the US terms, which China sees as an assault on its sovereignty.

China wants the tariffs removed as soon as the deal is struck. It wants the amount of goods it is required to buy to be realistic. It doesn’t want its sovereignty undermined, and its leadership humiliated, by being forced to legislate terms that have been forced upon it.

Those don’t sound like the outlines of an amicably negotiated deal.

Trump is prepared to go "all in," convinced that China is paying tens of billions of dollars for his tariffs (it’s not, US companies and consumers are) and that the tariff war is good for the US and will devastate China.

There’s an element of political calculation as well, as the 2020 presidential election is now on his horizon. He believes the trade stoush plays well with his base even though US farm bankruptcies have been rising sharply.

China’s state party posts defiant message about trade war with U.S. on social media site

China’s state party posts defiant message about trade war with U.S. on social media site The Chinese government posted a defiant message about its trade war with the U.S. on social media. "Bully us, wishful thinking!” it said in part.

A trade war between the US and China has been heating up this year, with the US Matthew Shay, president and CEO of the National Retail Federation said, "with these latest tariffs, many hardworking Americans will soon wonder why their shopping bills are higher and their budgets feel stretched."

The US and China may yet hold another round of trade talks despite the newest sanctions, but it now may Instead, he says, the Chinese feel Trump is merely using trade issues as a way “to undercut Three sources familiar with the Trump administration’ s economic strategy toward China tell me that

The administration has had to put in place $US12 billion in emergency relief for its farmers to try to offset the impact of the trade conflict. Trump is now talking about redistributing the revenue from the increased tariffs to the farm sector; buying their products and then donating them to "needy" countries.

The working assumption within the White House appears to be that the US can do far more damage to China than China can do to the US and therefore they can bend China to their will and remove it as a threat to US economic and geopolitical supremacy.

That’s probably true to a point – the damage to China’s economy, relative to GDP, is likely to be multiples of that suffered by the US. China, however, appears to be prepared to absorb the hits.

China also has options to blunt the impact of Trump’s tariffs, and exaggerate the impacts of its counter-measures.

An obvious one would be, not just to impose higher tariffs on US agricultural products or LNG, but to stop buying them where there are (as there is for soy and LNG) alternate sources of supply.

It could take non-tariff action against US companies operating in China, costing US companies sales to Chinese consumers or disrupting US supply chains by targeting intermediate goods.

China could also devalue the renminbi to offset the tariffs. The renminbi has fallen nearly 3 per cent against the US dollar in the past month.

There is, however, probably a limit to what China is prepared to contemplate in terms of depreciation, given its experience in 2015 when it did devalue and provoked a massive flight of capital.

It could also do more of what it has already done, injecting liquidity into its banking system to encourage lending, increasing infrastructure spending and reducing taxes to stimulate its economy and providing tax rebates for trade-exposed enterprises.

In the absence of a deal – Trump and Xi Jinping will meet at the G20 summit in Japan next month – the trade war will be neither easy nor quick to win.

If it were to drag into 2020, hurting US farmers and consumers, undermining financial markets, slowing the US economy and entering the political calculus, the Chinese might, however, expect Trump’s understanding of trade to improve quite rapidly.

Read more

Nike, Adidas call tariffs 'catastrophic' in open letter to Trump.
Nike Inc., Adidas AG and other footwear giants urged President Donald Trump to reconsider his tariffs on shoes made in China, saying the policy would be “catastrophic for our consumers, our companies and the American economy as a whole.” In all, 173 companies signed an open letter to the president, dated Monday and posted on the industry trade association’s website. It was also sent to Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross and National Economic Council director Larry Kudlow.

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