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Trump trade adviser says tariffs are 'necessary to defend this country'

June 22, 2018 03:26·
Trump trade adviser says tariffs are 'necessary to defend this country'

Trump trade adviser says tariffs are 'necessary to defend this country'

The collateral damage could be widespread.

"Ultimately, a negotiated solution is likely - and this is what both the USA and China want - but the risks are high and the tariffs could well be implemented before the issue is resolved", said Shane Oliver, Sydney-based chief economist at AMP.

US stocks are mostly higher Wednesday as technology and media companies lead a recovery from the turbulent trading seen the day before. The administration also revived its complaints Tuesday about America's gaping trade deficit with China, which it says reflects an unfair trading relationship.

"Further action must be taken to encourage China to change its unfair practices, open its market to U.S. goods, and accept a more balanced trade relationship with the United States", Trump said.

The Dow Jones Industrial Average .DJI fell 287.12 points, or 1.15 percent, to 24,700.35, the S&P 500 .SPX lost 11.18 points, or 0.40 percent, to 2,762.57 and the Nasdaq Composite .IXIC dropped 21.44 points, or 0.28 percent, to 7,725.59.

In London, shares in British engines maker Rolls-Royce soared almost 10 percent.

The White House is defending President Donald Trump's threat to impose tariffs on at least $200 billion worth of Chinese goods, arguing the trade penalties are "necessary to defend this country".

It seems like it's getting harder and harder to keep the ongoing nuclear talks with North Korea from getting caught up in a brewing trade war between the USA and China.

Beijing's response drew the president's ire.

The White House said Monday evening that if China goes through with its promise to retaliate against the U.S. tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods.

Combined, the potential tariffs on Beijing could reach $450 billion - an amount equal to 89 percent of Chinese goods imported to the United States past year.

Pundits said that President Donald J. Trump's new trade barriers stem directly from the "America First" trade policy he has espoused since the presidential campaign. "He's willing to totally close our market to their exports".

The tariffs would start to slow US growth, economists warn.

Over the weekend, China retaliated against the USA imposition of 25% tariffs on $34bn of Chinese goods, by targeting the same value of imports. "Trump could put more pressure on other countries like Japan and North Atlantic Treaty Organisation courtiers", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

The tariffs on Chinese imports are the latest in a spate of protectionist measures unveiled by Trump in recent months.

China's retaliation list was increased more than six-fold from a version released in April, but the value was kept at $50 billion, as some high-value items such as commercial aircraft were deleted. Soybeans are on the list - a direct shot at a swath of Trump supporters in the American heartland. Benchmark U.S. crude rose 3 cents to $65.10 a barrel in electronic trading on the New York Mercantile Exchange.

Goldman has forecast China's gross domestic product growth to be 6.6 percent this year. Or it could hold up their products at customs.

Chinese companies listed in the US took sharp losses. They've invested a cumulative $256 billion there since 1990 (versus the $140 billion China has invested in the United States), according to the Rhodium Group research firm and the National Committee on U.S. China's market is big enough to support the development of relevant industries.

Shares of chipmakers, which depend on China for a large portion of their revenue, slipped. "Hence, its impact on the economy is limited", Lu said. "If someone incites a trade war, we will firmly safeguard our legitimate interests".

"During the consultations China showed ample sincerity and goodwill".

Targeting petroleum puts the Trump administration's "energy dominance" agenda in Beijing's cross-hairs as US shale has grabbed share from Middle East suppliers in Asia. While U.S. crude will continue flowing to market even with tariffs, "it'll force you to put your oil somewhere else, and it'll cost you more" to line up other buyers.

Economists think the size of Trump's newest trade threats risk putting an even bigger dent in the USA economy. "China is in no mood to negotiate against a background of escalating threats and hostile rhetoric".

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