China trade war affects PHL economy

Jermaine Castillo
June 22, 2018

Trump said that Canada produced energy and timber but that it was time for them to stop taking advantage of the United States on trade.

He condemned China's "unfair practices related to the acquisition of American intellectual property and technology" and added: "Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong". Manufacturing iPhones involves nine companies, located across South Korea, Japan, Germany and the USA, and these companies ship the iPhone components to a company located in China, for assembly into final products and then exported to the United States and the rest of the world. "This would likely violate WTO rules, but I suspect China will care about violating WTO rules as much as Trump does".

The United States has already announced a 25% tariff on $50 billion of Chinese goods, most of which will take effect as early as July 6, to punish China for stealing American trade secrets.

These include major American exports to China such as soybeans, which brought in $14 billion in sales past year, and are grown in states that supported Trump during the 2016 presidential election.

Canada imposes such onerous tariffs on USA products - shoes, for instance - that people are forced to "scuff 'em up" in order to "smuggle" them home, the president said, seemingly confusing tariffs with duties.

Mr Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.

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The mention of "comprehensive measures" suggests Beijing might go beyond tariffs, said Jake Parker, vice-president for China operations of the U.S. Oxford Economics estimates that if Trump imposed the $200 billion in duties and China responded in kind, us growth could slow by 0.3 percentage point next year.

Tariffs on other U.S. goods will be announced at a later date, the Xinhua news agency reported.

These penalties would go into effect, the president said, "if China refuses to change its practices" and proceeds with its plans for retaliatory tariffs.

"You see what's happening with China", Trump said Tuesday during a speech to the National Federation of Independent Businesses.

Commodities have also suffered because of the rising US dollar following the Federal Reserve's decision to raise rates last week, he said.

Trump's announcement fuelled fears that economic losses, limited so far to companies hit by USA or Chinese tariff hikes, might spread if the dispute chills global trade. Under this Scenario U.S. employment will fall by 455,000.

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Despite the Chinese government's repeated pledges to further open its economy, 46 percent of respondents in the European Union Chamber of Commerce in China's annual business survey said they thought the number of regulatory obstacles they face in China would increase over the next five years. "It's not easy but we're getting there", he told a group of USA small business executives.

Beijing could also seek to make life hard for big USA companies that rely on the Chinese market for a big chunk of their revenue.

Trump is moving forward with the measures after months of sometimes fraught shuttle diplomacy in which Chinese offers to purchase more American goods failed to assuage his grievances over a widening trade imbalance and China's aggressive industrial development policies.

But Beijing faces challenges in retaliating directly: China ships far more goods to the United States ($505 billion a year ago, according to U.S. figures) than come back in the opposite direction ($130 billion).

World financial markets buckled after President Donald Trump ratcheted up the tensions by proposing a fresh batch of tariffs on Chinese products.

On April 3, the White House released a list of 1,300 Chinese products worth $50 billion that could be hit with potential tariffs. "It's not easy but we're getting there", the president said.

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The Trump administration had previously announced tariffs on imported steel and aluminum coming from several countries. The US announced plans for tariffs this spring, after an investigation into China's intellectual property practices.

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