Tit-for-tat trade war

Traders on the floor of the New York Stock Exchange.				CREDIT Rex Shutterstock

The further tariffs were being considered "in light of China's unfair retaliation" against earlier USA trade actions, which included a proposed $50 billion of tariffs on Chinese goods, Trump said in a White House statement on Thursday.

China's Commerce Ministry spokesman, Gao Feng, calling the U.S. action "extremely mistaken" and unjustified, said the spat was a struggle between unilateralism and multilateralism and that no negotiations were likely in the current circumstances.

"The market is getting more concerned about the possibility of a trade war between the USA and China", said Tom Cahill, portfolio strategist at Ventura Wealth Management.

Beijing has responded with a target list of 106 items imported from the United States worth a similar amount that would be hit by the same ad valorem tariff ("China retaliates for U.S. tariffs", Reuters, April 4). In response, China on Sunday slapped tariffs on $3 billion on agricultural products from the US including hog parts, wine, fruit and nuts.

Trump has previously cited the auto trade as an example of the unbalanced playing field, saying China puts a 25 percent duty on imported USA cars while the US charges 2.5 percent for Chinese vehicles.

On Wednesday, the Chinese Finance Ministry said Beijing would hit 106 American products, including soybean, automobiles, and chemicals, with a 25-percent tariff, worth $50 billion.

Treasury Secretary Steven Mnuchin said there's a "potential for a trade war" with China, but expressed hope that the world's two largest economies can work out their differences.




Given that a trade war with such a major trading partner is without precedent in modern times, we don't really know what it would look like.

"I'm not saying there won't be a little pain", Trump said Friday during an interview on 77 WABC Radio's "Bernie & Sid in the Morning" program.

Because it leads the nation in exports of pork, corn, and feed grain, ranks second for soybean exports, and is second for overall value of agriculture exports, Iowa stands to feel the pain of a trade war over tariffs as much as, if not more than any state.

The United States has appeared eager to impose tariffs to create leverage and force China into concessions on the bilateral trade deficit, intellectual property protection and forced technology transfer. Chinese and US officials haven't held talks "for a period of time" on any economic or trade issues, Gao said. Other U.S. carmakers such as General Motors and Ford Motor also manufacture in China.

Any national preparations made now for said trade war will bring on the very catastrophic economic adjustment it seeks to hedge. "Perhaps there will be some fruitful negotiations", he said.

However it added a full-blown trade war "would have a more pronounced effect". Tariffs can not have a major effect on the size of the USA trade deficit, which rose in February for the sixth straight month, to a near 9.5-year high. Within hours Beijing retaliated with the promise to hike levies on $50 billion worth of USA imports by 25 percent.

"We are exporting out pipes and tubes to the United States, but we are not dependent on America as we have got other markets, which we are been developing for the last few years".

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