Why Trump's Trade War With China Is So Risky

Why Trump's Trade War With China Is So Risky

Why Trump's Trade War With China Is So Risky

U.S. President Donald Trump again slammed Canada over a trade dispute and claimed that Canadians are buying common products in the U.S. and having to "smuggle" them back into the country because of high tariffs.

The U.S. tariff hikes imposed so far affect a total of about $109 billion of imports, according to Morgan Stanley.

However, many economists and businesses in the USA say the tariffs are likely to hurt some of the sectors the administration is trying to protect, which depend on China for parts or assembly.

After Trump's leniency prompted a backlash and left the fate of ZTE hanging in the balance, Chinese trade negotiators frustrated their American counterparts seeking to finalize an agreement and win more concessions.

But, he said, "the United States will no longer be taken advantage of on trade by China and other countries in the world".

The threat of a growing trade conflict with China hit financial markets hard, with Beijing vowing a firm response after Trump on Monday said he would implement tariffs on an additional $200 billion (151.8 billion pounds) of imports from China if Beijing went ahead with reprisals over an initial set of US tariffs.

"After the legal process is complete, these tariffs will go into effect if China refuses to change its practices", the president said in a statement.

Following Trump's announcement, China rolled out retaliatory tariffs on $50 billion worth of USA goods and promised to stand firm against the US's actions.

"The trade relationship between the United States and China must be much more equitable", he said in explaining his decision.

Less than 24 hours after the president dramatically escalated his trade war with China, the Dow Jones Industrial Average tumbled more than 300 points in early trading Tuesday, wiping out all of the index's gains for 2018.

"If the US side becomes irrational and issues the list, China will have to adopt comprehensive measures in quantity and quality in order to make strong countermeasures", said the statement.

The Canadian dollar, meanwhile, weakened to a one-year low of C$ 1.3237 overnight, before paring some of its losses on Tuesday, as investors anxious about Canada's own trade feud with the United States.

In turn, China says their new import taxes are in response to an earlier set of tariffs by the United States, also of $34 billion at a 25 percent rate.

In response, China announced tariffs on $34bn of United States goods including agricultural products, cars and marine products which will also take effect from 6 July.

Trade frictions between the United States and Canada have been particularly strained in recent weeks, with Trump taking umbrage at remarks by Canadian Prime Minister Justin Trudeau that were critical of the heavy US tariffs.

But such a move would have the support of several southern state lawmakers, including senator John Kennedy, a Louisiana Republican, who wrote Trump an April 17 to add shrimp and crawfish from China to the list of items that should get tariffed. "This is unacceptable", Trump said. To understand the effects of tariffs, look no further than washing machines and solar panels.

Apple is also concerned that the Chinese government will point to the way that Huawei has been accused of being a threat to USA national security, and take some type of action against Apple.

"While the White House is chasing some imaginary trade deficit, it will have very real consequences for the 1.3 million men and women of our industry".

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