[Albert]

Reuters
April 1, 2018
Ben Blanchard, Tony Munroe


BEIJING (Reuters) - China has increased tariffs by up to 25 percent on 128 U.S. products, from frozen pork and wine to certain fruits and nuts, escalating a spat between the world’s biggest economies in response to U.S. duties on imports of aluminium and steel.

The tariffs, to take effect on Monday, were announced late on Sunday by China’s finance ministry and matched a list of potential tariffs on up to $3 billion in U.S. goods published by China on March 23.

Soon after the announcement, an editorial in the widely read Chinese tabloid Global Times warned that if the U.S. had thought China would not retaliate or would only take symbolic counter-measures, it can now “say goodbye to that delusion.”

“Even though China and the U.S. have not publicly said they are in a trade war, the sparks of such a war have already started to fly,” the editorial said.

China’s Ministry of Commerce said it was suspending its obligations to the World Trade Organization (WTO) to reduce tariffs on 120 U.S. goods, including fruit and ethanol. The tariffs on those products will be raised by an extra 15 percent.

Eight other products, including pork and scrap aluminium, will now be subject to additional tariffs of 25 percent, it said, with the measures effective from April 2.

“China’s suspension of its tariff concessions is a legitimate action adopted under WTO rules to safeguard China’s interests,” the Chinese finance ministry said.

China is moving swiftly with retaliatory action amid escalating trade tensions between Beijing and Washington, which have rocked global financial markets in the past week as investors feared a full-blown trade spat between the two countries will be damaging for world growth.

U.S. President Donald Trump is separately preparing to impose tariffs of more than $50 billion on Chinese goods intended to punish Beijing over U.S. accusations that China systematically misappropriated American intellectual property - allegations Beijing denies.

China has repeatedly promised to open its economy further, but many foreign companies continue to complain of unfair treatment. China warned the United States on Thursday not to open a Pandora’s Box and spark a flurry of protectionist practices across the globe.

“There are some people in the West who think that China looks tough for the sake of a domestic audience, and would easily make concessions in the end,” the Global Times editorial said.

“But they are wrong.”

The Global Times is run by the ruling Communist Party’s official People’s Daily, although its stance does not necessarily reflect Chinese government policy.

Reaction to China’s measures varied on Chinese social media, with some saying Chinese customers would be the one ultimately paying for the trade war.

“Why not directly target soybean and planes? The tariffs that China announced today don’t sound a lot to me,” said a user on Weibo, a Twitter-like microblog popular in China.

Aircraft and soybeans were China’s biggest U.S. imports by value last year.

In a statement published on Monday morning, the Chinese commerce ministry said the United States had “seriously violated” the principles of non-discrimination enshrined in World Trade Organization rules, and had also damaged China’s interests.

“China’s suspension of some of its obligations to the United States is its legitimate right as a member of the World Trade Organization,” it said, adding that differences between the world’s two largest economies should be resolved through dialogue and negotiation.

Weibo prominently featured the list of U.S. goods that China is targeting among the day’s “hot” trending topics.

“I will never buy fruit from the U.S.,” a Weibo user wrote.

[Potemkin]

Looks like the Chinese are calling Trump's bluff. Lol.

[Suntzu]

The U.S. can certainly produce enough steel and aluminium domestically. Can China produce enough food to feed itself?

[Victoribus Spolia]

Looks like the Chinese are calling Trump's bluff. Lol.

Yeah....I am like 1% worried about this.....China stands to lose more on this "war" than we do as far as I am concerned as they have basically created an export economy.

I also doubt this was a bluff. As much of a buffoon as Trump may or may not be, I seriously doubt that on an business-eque policy decision such as this that he did not expect or account for Chinese retaliation. Such an assumption strikes me as oddly naive.

[Potemkin]

I also doubt this was a bluff. As much of a buffoon as Trump may or may not be, I seriously doubt that on an business-eque policy decision such as this that he did not expect or account for Chinese retaliation. Such an assumption strikes me as oddly naive.

Judging by his record as a businessman (three bankrupt businesses, or was it four?), I suspect that Trump was merely bluffing. Unfortunately for him, the Chinese government is rather less gullible and hapless than most of Trump's investors were. Or voters. Lol.

[Albert]

Chinese are in the wrong in this. They were dumping their steel on the market, now when US does the right thing of defending its domestic industry, China retaliates. It is wrong no matter how you look at it. It seems to be an act guided by prestige then practicality. China does not want to look as the "weaker" party in this. Yet I think by retaliation they will ironically expose themselves that they are.

They still have not touched the precious soybean imports. If Trump goes on with further tariffs that he is planning, they probably will retaliate with that as well. Once the pork and soybean runs out we will see what happens. It is like cutting out tea for the British, and we all know how that worked out in Americas.

[Ter]

.China stands to lose more on this "war" than we do as far as I am concerned as they have basically created an export economy.

This is true.
The US has a big market for its own products and many other export markets where they can sell their fruit and wine.
One little step against globalism.

[Zagadka]

Chinese are in the wrong in this. They were dumping their steel on the market

I never understood this mentality. If you support free trade and nationalism, you wouldn't hesitate to dump your products into other markets, but somehow it is "wrong".

[Victoribus Spolia]

three bankrupt businesses, or was it four?

To be frank, I don't really understand this talking point.

Bankruptcy is a retarded government-created rip-off and Trump has been quite plain about using it to his sharkish advantage (which he also bragged about regarding taking advantage of tax loop holes.)....

I seriously doubt that if debtor's prison had been a serious possibility for him that he would have ever filed Chapter 11.

All of these bazillionaries use this kinda shit to "win," and they have no shame in doing it. Obviously I am not condoning this behavior per se, but at the same time, I can see why they do it....if the government is offering you an "out" or an "advantage," of course a savvy businessman will take it.

[Potemkin]

To be frank, I don't really understand this talking point.

Bankruptcy is a retarded government-created rip-off and Trump has been quite plain about using it to his sharkish advantage (which he also bragged about regarding taking advantage of tax loop holes.)....

I seriously doubt that if debtor's prison had been a serious possibility for him that he would have ever filed Chapter 11.

All of these bazillionaries use this kinda shit to "win," and they have no shame in doing it. Obviously I am not condoning this behavior per se, but at the same time, I can see why they do it....if the government is offering you an "out" or an "advantage," of course a savvy businessman will take it.

This is why I believe that debtors' prison should never have been abolished. If we're going to have capitalism, then let's really have capitalism.

[Ter]

I never understood this mentality. If you support free trade and nationalism, you wouldn't hesitate to dump your products into other markets, but somehow it is "wrong".

"Dumping" is a technical term, it means that goods are sold at less than their production value in order to gain market share.
We can just assume that Chinese products are cheaper than goods produced in developed countries because of the lower wages and lower other associated costs.

[Victoribus Spolia]

This is why I believe that debtors' prison should never have been abolished. If we're going to have capitalism, then let's really have capitalism.

I cannot agree more.

Loan Sharks and Debtors Prison To Make American Great Again.

We should do an ad campaign with a picture of warren buffet and george soros in the stocks

[Rancid]

If we had true capitalism, all would be fair game right? Including dumping products.

Anyway, as with anything there will be winners and losers. There will be a lot of winners in the US, but also a lot of losers. I'm hoping the losers are largely the people that votes for Trump.

[Crantag]

The U.S. can certainly produce enough steel and aluminium domestically. Can China produce enough food to feed itself?

The answer to that is 'yes'.

China has a long-time policy of self-sufficient grain production (few countries are self-sufficient in production of agricultural staples). Neoliberals like to talk shit about it and call China delusional for it.

[foxdemon]

If we had true capitalism, all would be fair game right? Including dumping products.

Anyway, as with anything there will be winners and losers. There will be a lot of winners in the US, but also a lot of losers. I'm hoping the losers are largely the people that votes for Trump.

Like the capitalism we had in 1929? If prices go down without limit, the result is deflation. Wages go down, spending goes down, people lose their jobs.

The reason these low prices are achievable now in state support. But that means state debt. Can’t keep that charade going forever.

I don’t think there will be any winners here, not in China, not in America, nor anywhere else. This trade war is just going to racket up world tensions by impoverishing too many people and thus creating domestic demands for action.

And we all know what action that will lead to.

Maybe I am wrong about there being no winners. Those who own the bomb factories might yet make a tidy profit.

[Crantag]

Yeah....I am like 1% worried about this.....China stands to lose more on this "war" than we do as far as I am concerned as they have basically created an export economy.

I also doubt this was a bluff. As much of a buffoon as Trump may or may not be, I seriously doubt that on an business-eque policy decision such as this that he did not expect or account for Chinese retaliation. Such an assumption strikes me as oddly naive.

China is already involved in turning toward increasing reliance on domestic demand for Chinese goods (this means putting more money in the pockets of Chinese workers), as well as positioning the Chinese Yuan to be a global reserve currency. As for the increasing reliance on domestic demand--the move toward this received its first steroid injection in response to the export demand shock triggered by the 2008-9 financial crisis. What Trump is doing is probably causing the Chinese to look to accelerate the moves further. This could entail a bit of disruption but shouldn't be anything too serious.

[Crantag]

Chinese are in the wrong in this. They were dumping their steel on the market, now when US does the right thing of defending its domestic industry, China retaliates. It is wrong no matter how you look at it. It seems to be an act guided by prestige then practicality. China does not want to look as the "weaker" party in this. Yet I think by retaliation they will ironically expose themselves that they are.

They still have not touched the precious soybean imports. If Trump goes on with further tariffs that he is planning, they probably will retaliate with that as well. Once the pork and soybean runs out we will see what happens. It is like cutting out tea for the British, and we all know how that worked out in Americas.

Producing more steel more cheaply is not really the same thing as dumping. China produces half of the world's steel. The US already imports relatively little of it, on account of previous protectionist policies aimed at Chinese steel.

[Crantag]

To be frank, I don't really understand this talking point.

Bankruptcy is a retarded government-created rip-off and Trump has been quite plain about using it to his sharkish advantage (which he also bragged about regarding taking advantage of tax loop holes.)....

I seriously doubt that if debtor's prison had been a serious possibility for him that he would have ever filed Chapter 11.

All of these bazillionaries use this kinda shit to "win," and they have no shame in doing it. Obviously I am not condoning this behavior per se, but at the same time, I can see why they do it....if the government is offering you an "out" or an "advantage," of course a savvy businessman will take it.

Trump can't even get credit. Not being able to get credit is not a good circumstance for a supposed businessman.

[Victoribus Spolia]

I'm hoping the losers are largely the people that votes for Trump.

Well, as the productive members of the country, they look to be both the winners and the losers.

Increased steel and aluminium production would be good for pro-Trump factory workers; whereas, the restriction of Chinese imports of American agricultural goods will be bad for pro-trump farmers.

However, like I said, I think this will end up hurting China more than the United States.....Though as an Anarcho-Capitalist....examining this situation is like discussing which end of the turd will be the least gross to lick.

China is already involved in turning toward increasing reliance on domestic demand for Chinese goods

Technically the U.S. has been doing this too. In fact, the mutually self-interested nationalist trends in both countries is what has brought us to this point.

as well as positioning the Chinese Yuan to be a global reserve currency

That is a separate but very important issue. I don't see it happening soon, but I think the U.S.'s recent approach to domestic petroleum production is part of a long-game bracing for this; however, I tend to think the end of the petro-dollar will result in economic depression on an international level.

What Trump is doing is probably causing the Chinese to look to accelerate the moves further. This could entail a bit of disruption but shouldn't be anything too serious.

You may be right about this, in the end, China and the United States could both, theoretically, be almost self-sufficient. The scale of these nations, their climate zones, their natural resources, et. al. allow for them to really not need each other long term.

However, in the short-term, I think its hard to deny that China is an export economy, probably the greatest example of an export economy that is also a major world power. For this reason alone I think it stands to lose more from a tit-for-tat trade war using tariffs.

[Zamuel]

"Dumping" is a technical term, it means that goods are sold at less than their production value in order to gain market share. We can just assume that Chinese products are cheaper than goods produced in developed countries because of the lower wages and lower other associated costs.

Chinese "dumping" into America isn't just about market share and extends beyond steel into lots of "Cheap" merchandise. It's driven by China's need to maintain employment. They literally cannot afford idle workers. America can live without "Dollar stores" and outlets like Harbor Freight. Take a look at Ebay's prices on straight from China merchandise (and the HUGE amounts of it.)

If china allows this trade war to really get rolling they are in big trouble once their warehouses are full and production must be curtailed.

Zam