Clash of Titans: US, China trade spat and its impact on commodities

US President Donald Trump

The Trump administration and China's leadership have threatened to impose tariffs on $50 billion of each other's goods.

He pledged to impose tariffs on imports from countries he said had exploited the US. "The woes the administration is inflicting on Chinese companies do not simply translate into boons for USA enterprises and the US economy".

EU countries approved a raft of tariffs on Thursday (14 June) targeting U.S. goods including whiskey and motorcycles in retaliation against painful duties imposed by President Donald Trump on European metals.

The European tariffs target politically resonant products, including 25 percent duties on Harley-Davidson Inc. motorcycles, Levi Strauss & Co. jeans and bourbon.

However, in the past couple of years, the United States (US), the greatest proponent of WTO and free trade, is turning protectionist.

Presumably the cars built at the US plants would not be affected by tariffs.

The trade war worries were initially triggered in March after the U.S. planned to impose tariffs on steel and aluminium imports.

"It's a classic case of 'ready, fire, aim, ' and it will only lead to litigation in the USA and a loss at the WTO when we are inevitably taken there", he said.

In turn, Trump quickly responded to the European salvo, dashing off a tweeted warning Friday morning that if the EU tariffs and barriers "are not soon broken down and removed" the U.S. will place a 20 percent tariff on all European-built cars coming into the U.S. "Build them here!" he tweeted.




US auto executives said privately they have spent months looking at the potential impacts to sales of new tariffs, and they view the presidential tweet as a sign significant new tariffs appear likely. Renowned industrialist Anand Mahindra says that, given the size and composition of Indian economy we need not worry from this trade war as we do not depend upon any single country or commodity for our exports.

A worker attaches a BMW hood ornament onto a completed vehicle at the BMW auto assembly plant in Leipzig, Germany.

"Having ordered an investigation into whether auto imports are a national security threat, he has now undercut that by reaching his conclusion before the investigation has barely begun", Mr Reinsch said.

A U.S. Chamber of Commerce senior vice president, John Murphy, was cited by the Associated Press as saying he estimates that $75 billion in U.S. products could be subjected to new foreign tariffs by the end of the first week of July.

The Washington trade association for BMW, Daimler and Volkswagen's operations in the USA warned consumers will be harmed by higher tariffs. He said while tariffs alone would not derail global growth, they could spark market volatility and lead to the postponement of business decisions.

The latest threat comes amid escalating trade tensions between the U.S. and its partners. China's reaction has only hardened Trump's stand, who has threatened to extend 10 per cent tariff to a wider net of products worth $200 billion.

The new European Union tariffs enacted Friday apply to billions of dollars' worth of American goods - including jeans, bourbon and motorcycles.

Trump's ire may be directed at a 10 percent import tariff on American cars sold in those countries.

But US Assistant Secretary of State for European and Eurasian affairs Wess Mitchell said on Thursday that Trump's approach towards his allies was about "strategic renovation". It exported more than 70% of those cars to other countries. Volkswagen imports all of its luxury brands - Audi, Porsche, Bentley and Bugatti.

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