Published: Wed, June 20, 2018
Worldwide | By Victor Meyer

Dow Falls 300 Points as Trump Doubles Down on Tariffs

Dow Falls 300 Points as Trump Doubles Down on Tariffs

If Trump does impose these additional tariffs, the US will have imposed tariffs on $450 billion in Chinese goods.

In the separate dispute about steel and aluminium tariffs, he also has to contend with the politically targeted retaliation that other countries such as Mexico, Canada and the European Union have in hand, meant to hit important states in the mid-term elections.

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

The escalation in trade tensions comes at an inopportune time for China's policy makers, with indicators for May suggesting growth is already dialing back a notch.

China on Tuesday showed no sign of backing down after President Donald Trump threatened to kick off a full-blown trade war with the country.

The president warned that he was prepared to hit China with an additional US$200 billion in import taxes unless Beijing capitulates. China's Ministry of Commerce quickly responded with a statement saying that it would respond with tariffs on the "same scale and the same strength".

"In a global trade war, no matter how you spin tariffs, retailers and the American families that we serve are the losers", said Hun Quach, vice president, worldwide trade, for the Retail Industry Leaders Association.

In a briefing with reporters Tuesday morning, White House trade adviser Peter Navarro downplayed the notion that the US was in a "trade war" with China.

The small-cap Russell 2000 index was down 0.5 percent, a smaller drop than its large-cap peers, as its components are relatively more insulated to a global trade war.

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

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The pain has been limited so far to sellers of goods targeted by USA and Chinese tariffs, but economists say the impact could spread.

"Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong", he said in a statement announcing the possibility of additional tariffs.

Trump added that if Beijing hit back at this latest manoeuvre, the United States would find another $200 billion worth of goods to impose tariffs on.

Trump said Monday that China's response "indicates its determination to keep the United States at a permanent and unfair disadvantage".

USA tariffs on imported steel and aluminum have already drawn a response from a range of countries including Canada, Mexico and the European Union.

Some of those tariffs will be applied from July 6, while the White House is expected to announce restrictions on investment by Chinese companies in the United States by June 30.

Chinese President Xi Jinping is not happy with the moves on trade, with China labelling it "blackmail".

The White House said it would consult on tariffs on the other $16bn of products, and would apply these later.

So far Beijing has targeted major American exports to China such as soybeans, which brought in $14 billion in sales a year ago, and are grown in states that supported Trump during the 2016 presidential election, as well as other politically important products.

Harvard Economics Professor Martin Feldstein on President Trump's trade negotiation strategy.

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