Midwest soybean farmers brace for impact of trade war

11 July, 2018, 10:04 | Author: Sheila Harris
  • Exchange Group offices are seen in the City of London Britain

Washington-based think tank the Peterson Institute for International Economics (PIIE) expects United States tariffs on Chinese goods, which it says particularly target computers and electronics, to hurt multinationals more than China as well as other firms in Asia. Given that Beijing has kept its word to retaliate, the ball is in Trump's court again now.

"You saw with China, $50 billion and another $200 billion frankly is waiting", he said at the rally in Great Falls, Montana, referring to envisaged additional 10 percent tariffs on $200 billion in Chinese imports. China said it will immediately put on his own similarly sized tariffs on an unspecified clutch of American goods.

"If it weren't for trade right now, the USA economy would be hitting on all cylinders", Bullard said.

The list avoids direct tariffs on consumer goods such as cellphones and footwear. Part of his plan is to radically change how USA trade deals work and to focus on protecting the domestic economy.

A model by Pictet Asset Management reckons a 10 per cent tariff on USA trade fully passed on to consumers could tip the global economy into stagflation and knock 2.5 per cent off corporate earnings globally.

The Dow Jones Industrial Average gained 3.7% in the first two weeks of June, for instance, before pulling back on news that a portion of the tariffs would go into effect in early July. Because products that are made in China - from Apple products to Nike ones - are going to get expensive, and be more expensive on the shelves of Walmart for everyday American consumers.

However, it's important to remember that there are national security and intellectual property issues at the heart of this dispute - with China, anyway. The drop might reflect a deliberate devaluation by Beijing to signal its "displeasure over the state of trade negotiations", according to a report from the Institute of International Finance, a banking trade group.

In other words, it was about forming what Trump's economic adviser Larry Kudlow might term a "trade coalition of the willing" against China.

While the USA tariffs aim to cut down the trade deficit, there are worries about how China's retaliatory tariffs will hit the USA economy.

As part of the talks, the two countries signed a raft of commercial agreements worth some €20 billion ($23.5 billion).

States such as Louisiana export about $5.7bn of goods to China.

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Businesses around the United States told the central bank that spending plans had been scaled back or postponed and they also warned of further adverse effects from the trade conflict, according to a Federal Reserve survey. The dollar and Treasuries edged lower as traders looked ahead to the release of U.S. jobs data.

Despite dire warnings about the impact on the US, Trump believes the robust American economy can outlast its rivals in the current battle.

Companies in industries that use metal, electrical components and construction products will have to pay more for raw materials, and possibly charge more for their work, or cut or move jobs. "But it is applying the brakes to a global economy that has less durable momentum than appears to be the case", said Rob Carnell, chief economist at ING, in a note to clients.

China's retaliatory measures were expected to hit back largely at agricultural products created to hurt Trump supporters.

Midnight Eastern Time on Friday marked the moment the administration's tariffs on Chinese imports went into effect.

The lists of goods to be hit by tariffs have been updated several times by both administrations.

Moscow also announced Friday it had slapped 25 percent tariffs on some United States goods, joining the global push-back against Trump's offensive.

Gerard Bottino/CrowdSpark/NewscomBegun, the trade war has.

This also risks a chain reaction as countries start clamping down on partners, which then retaliate.

Doug Goehring, the Republican state agriculture commissioner, said the Chinese tariffs are causing some anxiety, but he advocated taking a "deep breath".

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