One more piece in a machine just waiting to pack. Donald Trump relaunched Thursday the trade war against Beijing, announcing his intention to extend additional tariffs to all imports from China. This caused market amazement, worried about the impact on the US economy, but also the anger of the Chinese government.
Markets are kicking ...
In a series of tweets, the US president, who seeks a second term, said that his administration would impose, as of September 1, "small additional tariffs of 10% on the $ 300 billion" imports Chinese until then spared. "Imposing tariffs is in no way a constructive way of resolving economic and trade frictions," Chinese Foreign Minister Wang Yi said in Bangkok in statements to a Chinese channel.
... during the talks the US will start, on September 1st, putting a small additional Billion Dollars of goods and products coming from China into our Country. This Billions Dollars already Tariffed at 25% ...
- Donald J. Trump (@realDonaldTrump) August 1, 2019The announcement of Donald Trump has had the effect of a bomb on the markets. Oil finished down nearly 8% in New York and major stock indices on Wall Street ended in the red. The reaction of the Asian markets was identical to the opening: the Tokyo Stock Exchange and the Chinese stock markets have suffered the blow. "I'm not worried" about the decline in markets, then assured Donald Trump to journalists. "I expected that."
... the US economy could do the same
Donald Trump also warned that he could further increase tariffs on Chinese products if Beijing did not accept US requirements. Requirements of two kinds: massive purchases of US agricultural products and stoppage of sales of fentanyl, a very powerful opiate that wreaks havoc in the United States and of which China is one of the main producers. The US president said Chinese President Xi Jinping wanted an agreement but said he "was not going fast enough". Yet, Beijing said Thursday have bought in recent weeks more US agricultural products. And the negotiations between Americans and Chinese seemed to resume in a relatively peaceful climate this week in Shanghai.
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Washington already imposes additional tariffs of 25% on more than 250 billion dollars of Chinese goods. Donald Trump raised the possibility, if Beijing was to resist, to go "well over 25%". If these future taxes were actually implemented, all the imports coming from the Asian giant would be overtaxed. Until then, the US administration had spared consumer goods so that the US economy, driven by household consumption, had remained relatively immune to the trade war. But this could deteriorate with this full taxation.
Blow hot and cold
However, Donald Trump does not give up his usual habit of blowing hot and cold in this conflict. The US president says the talks will continue as planned "early September." But China-US Economic Council (USCBC) chairman Craig Allen fears that this decision will lead the Chinese to abandon negotiations. The president "plays with fire," warns Gregori Volokhine, an analyst at Meeschaert Financial Services. This does not seem to disturb the host of the White House, who went so far as to say Thursday that he could do without trading with China.