U.S. and China Expand Trade War as Beijing Matches Trump’s Tariffspermalink


The Trump administration on Friday escalated a trade war between the world’s two largest economies, moving ahead with tariffs on $50 billion of Chinese goods and provoking an immediate tit-for-tat response from Beijing.

These countries are fighting back, drawing up retaliatory measures that go after products in Mr. Trump’s political base. China’s response was swift on Friday, focusing on $50 billion worth of American goods including beef, poultry, tobacco and cars.

The moves could damp economic growth that has been stoked by the administration’s tax cuts — though the overall effects are likely to be limited because of the small size of the tariffs relative to the American economy. But in a few industries that are heavily affected, the pain could be substantial. Economists say the tariffs will drive up prices for American consumers purchasing products at retail stores as well as for businesses that depend on China for parts used to make other goods in the United States.

Imposing tariffs can only have desired results, if a country has the potential to produce the end consumer goods, without leading to an inflation for its own middle class consumers.

Generally levying tariffs on Chinese products results in consumers paying more than having any tangible effects on the growth of the local industries and employment., especially in a country like United States, where labor wages and cost of doing of business exceed far more than the most part of the world and Asia.

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U.S. President Donald Trump’s new trade tariffs will lop at most a couple of tenths of a percentage point off U.S. growth and add a similar amount to inflation, small fry for a $19 trillion economy that is experiencing its second longest economic expansion on record.

American consumers and businesses have taken the tariffs in their stride and the growing economy has brought in more workers, pushing unemployment down to levels not seen since the 1960s. The costs have been manageable so far, with Commerce Secretary Wilbur Ross saying the metals tariff, for example, will add a few hundred dollars to the cost of a car.

According to Reuters, it isn’t going to have a significant impact for an enormous $19 trillion economy., however at the end of the article they make a subtle cautious note too.

Trump’s expansion of unilateral trade action goes well beyond recent actions from the United States. Before Trump acted, the biggest measure was imposed in the 1980s when Washington forced Japan to limit exports of cars.

Trump’s top trade negotiator, Robert Lighthizer, was instrumental in that deal, which helped shield Detroit automakers from Japanese competition, but at a cost.

According to an estimate from economic think tank PERC, the additional sticker price cost to American consumers from those measures was $1,200 per car. Overall consumer losses from the restrictions amounted to $13 billion, the think tank said in a 1999 report.

So far, we can conclude that it may not have as remarkable economic significance as it appears, however, it might deteriorate the political relationship with China, as well as leave EU allies and Canada with a bad taste in the mouth.

And Mexico sadly does not even count, neither as a friend nor a foe., the most recent precedent set by White House is to simply turn a deaf ear to their uproar, resulting from the emotional distress and lack of respectful behaviour from the administration.

Further Reading: 

Chinese Tariffs Are Already Hitting Trump Voters www.nytimes.com


In Iowa, where farmers raise 40 million to 50 million pigs annually, President Trump’s tariffs on steel and aluminum from Mexico have already cost producers $560 million, according to an Iowa State University economist. How can that be, you ask. Mexico has threatened countervailing tariffs that include a 20 percent tariff on American pork. That prospect alone sent hog prices tumbling. If you like barbecued ribs, this could be a great summer for you. If you raise the pigs, you may be eating more barbecued beans.

Me wonders, is it merely coincidental or China did really figure it out, how to troll Mr. Trump and his voters, I would rather chalk it up to ‘misfortune’ and ‘bad karma’1.

1. The meaning of bad karma is activities including casting a vote in favor of someone disdained by the liberal media, that result in suffering. What is the meaning of a bad karma? www.quora.com

Saturday, June 16, 2018