nsucurrent.com April 24, 2018

US, China stay guarded on talks amid trade war fears

09 April 2018, 12:45 | Lowell Little

US, China stay guarded on talks amid trade war fears

Trump US lost trade war with China years ago

Trump, in light of what he called China's "unfair retaliation" against earlier U.S. trade actions, had upped the ante on Thursday by ordering USA officials to identify extra tariffs, escalating a tit-for-tat confrontation with potentially damaging consequences for the world's two biggest economies.

"If the United States side disregards opposition from China and the worldwide community and insists on carrying out unilateralism and trade protectionism, the Chinese side will take them on until the end at any cost", the Ministry of Commerce said in a statement on its website.

The latest round of proposed US tariffs target several specific categories of steel and aluminum made in China.

The moves follow U.S. tariffs that were imposed earlier this year on Chinese steel and aluminum, which also prompted retaliatory measures from China.

Chinese direct investment in the USA has grown quickly in the past decade to nearly US$70 billion, fast approaching the US$75 billion that the U.S. has invested in China over several decades.

On Wednesday, China announced its intentions to impose tariffs on $50 billion worth of imports from the USA as a tit-for-tat response to a similar plan announced by the American side in late-March. "China, the United States and the world economy", former U.S. Treasury Department official Christine McDaniel, now with the Mercatus Center at George Mason University in Virginia, told an Australian news agency.

"We absolutely are willing to negotiate and not get into a trade war". The Dow was down 700 points late in the day. "We don't have a trade war, we've lost the trade war", Trump said in a radio interview with NY radio show, 77 WABC's "Bernie & Sid". Over time, it will improve if there's less talk and rhetoric but if they're going to say anything, this is sort of thing is probably fine: it's not inflammatory and it's clear the United States just wants to negotiate. A key reason is that in the absence of U.S. leadership, China faces less resistance in setting the worldwide standards in trade and investment and technology development.

Mr Kudlow, who has repeatedly sought this week to soothe markets with mention of possible talks, told Bloomberg Television there were always ongoing discussions on trade between the United States and China but that negotiations on the tariffs had not begun. Chinese and US officials haven't held talks "for a period of time" on any economic or trade issues, Gao said. Also at risk are foreign firms that produce in the U.S. Germany-based BMW sends 89,000 vehicles annually from the U.S.to China, the Associated Press reported, while Daimler AG's Mercedes-Benz ships 65,000.

Though the US tariffs target Chinese drug makers, those on the losing side may be American pharmaceutical companies that make generics such as Mylan NV. Trump has tweeted that it is "easy" to win a trade war.

Analysts at Oxford Economics, referring to the fact that the tariffs are not yet in effect, said in a note to clients that, "Importantly, these threatened tariffs will be subject to negotiation, and therefore shouldn't be considered as final".

Meanwhile, Larry Kudlow continued to do the media rounds.

Political risk consultancy the Eurasia Group says this is shaping to be the likeliest year for the geopolitical equivalent of the 2008 global financial crisis.

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