How Additional China Tariffs Could Hit Your Wallet Harder Than Expected

by Ben Pena May 10, 2019, 2:14
How Additional China Tariffs Could Hit Your Wallet Harder Than Expected

"China always believes that mutual respect, equality and mutual benefit are the premise and basis for reaching an agreement", Xinhua quoted the Chinese official as saying.The US President on Sunday warned that he would raise tariffs on Dollars 200 billion of Chinese goods to 25 per cent from the current threshold at 10 per cent, as well as tax almost all Chinese exports in the United States.

The Chinese Ministry of Commerce fired the warning shot after President Donald Trump reiterated his plans for the hike in a series of Wednesday morning tweets.

Global equities tumbled toward five-week lows as the escalating trade fight fed worries about the world economy and investors sought the safety of bonds and the Japanese yen, which hit a six-week high against the USA dollar.

The 150-page trade agreement was sent to Washington from Beijing with edits that reversed China's position on several core USA demands, Reuters reported, citing unnamed sources familiar with the document.

After some speculation that a Chinese delegation may not travel to Washington for trade talks, a spokesman for China's foreign ministry confirmed that officials would attend the meetings on Thursday and Friday.

The US and China have moved to within 36 hours of a full-scale trade war after Washington published a list of imported products that will face higher tariffs from Friday. Trump alleged. "Guess what, that's not going to happen!"

The U.S. will boost tariffs from 10 percent to 25 percent on $200 billion worth of Chinese imports on Friday, according to a notice published Wednesday in the Federal Register from the U.S. Trade Representative's office.

Trump even got some bipartisan backup from Senate Minority Leader Chuck Schumer (D-N.Y.) on the matter, who told him to "hang tough" and added that, "Strength is the only way to win with China".

It has been reported that United States officials are unhappy with China reneging on trade commitments, but the administration, calling it "unacceptable", refrained from listing what exactly Beijing failed to do.

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Beijing has recently adopted new laws, including a Foreign Investment Law, and amended others, in moves some see as efforts to tackle concerns of the United States and other foreign investors.

Trump vowed Sunday to ratchet up existing tariffs this week and also to extend the 25 percent punitive duties to the remaining $350 billion in Chinese goods imported into the country each year.

He also said that China's vice-premier Liu He would fly to Washington this week for the next stage of talks as originally planned.

However, economists and even Trump's fellow Republicans in Congress, stress that United States importers and consumers are the ones that pay the price for higher tariffs.

Stocks treaded water Wednesday after tumbling in prior-day trading, when the Dow fell 473 points and other benchmark indexes also slumped amid mounting investor concerns about trade tensions.

Oxford Economics warned that escalating the tariffs to the remaining Chinese goods, which would be expected to spark further retaliation from Beijing, would cut 0.3 percentage points off USA growth.

'Weak growth in Chinese exports to the U.S. will also be concerning to Chinese officials, particularly amid a potential escalation in the trade war, ' said Nick Marro, an analyst at The Economist Intelligence Unit.

Despite Trump's rhetoric to the contrary, tariffs are paid by US importers of foreign goods.

Trade talks are expected to resume this week.

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