Trump threatens to slap 10% tax on $200-bn goods, Beijing vows to fight back
Washington/Beijing : US President Donald Trump has threatened to impose tariffs on an additional $200 billion worth of Chinese goods unless Beijing ceases its “unfair practices”, escalating a trade war between the world’s two largest economies that hit the global stock markets.
Trump, pursuing his ‘America First’ policy, has been insisting that China has been unfairly benefitting from a massive trade imbalance with the US, now estimated to be $376 billion. During the 2016 election campaign, he had promised to use tariffs to cut the US trade deficits.
The White House said that if China goes through with its promise to retaliate against the US tariffs announced last week, the US will impose tariffs on an additional $200 billion worth of Chinese goods.
“Further action must be taken to encourage China to change its unfair practices, open its market to US goods, and accept a more balanced trade relationship with the US,” Trump said on Monday.
The move followed tariffs applied last week on $50 billion in Chinese imports to the US. China responded by saying it would hit 659 US products worth $50 billion.
Trump said that he had ordered US Trade Representative Robert Lighthizer to identify a second tranche of goods imported from China for tariffs of 10 per cent.
Trump said after the legal process is complete, these tariffs worth $200 billion will go into effect if China refuses to change its practices.
“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the US and China must be much more equitable,” Trump said. “However, and unfortunately, China has determined that it will raise tariffs on $50 billion worth of US exports. China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” Trump said.
“Rather than altering those practices, it is now threatening US companies, workers, and farmers who have done nothing wrong,” he said.
Meanwhile, senior White House economic aide Peter Navarro said China has more to lose than the US in the trade dispute but Washington remains open to dialogue with its largest trading partner. “It’s clear that China does have much more to lose,” he said, noting that China exported more than $500 billion to the US last year, far more than the $130 billion it imported from the US.
In Asia, while the Hong Kong stock market was down 2.8 per cent, the Shanghai plunged 3.8 per cent amidst the global concern over a tit-for-tat trade war between the US and China.
Frankfurt index shed 1.4 per cent in late morning deals. In Beijing, China’s Commerce Ministry responded swiftly to Trump’s latest threat, warning that if the US imposed fresh tariffs, China would have to adopt “comprehensive measures combining quantity and quality to make a strong countermeasure.”
The US “practice of extreme pressure and blackmail departed from the consensus reached by both sides during multiple negotiations and has also greatly disappointed international society,” it said.
Trump’s latest comments came hours after US Secretary of State Mike Pompeo accused China of engaging in “predatory economics”.
“Chinese leaders over these past few weeks have been claiming openness and globalisation, but it’s a joke. Let’s be clear: It’s the most predatory economic government that operates against the rest of the world today. This is a problem that is long overdue in being tackled,” Pompeo said.
US stocks fell and the Dow Jones Industrial Average turned negative for the year. At 12:56 p.m. ET, the Dow Jones Industrial Average was down 343.64 points at 24,643.83, the S&P 500 was down 20.16 points at 2,753.59 and the Nasdaq Composite was down 65.11 points at 7,681.92.
“Whether that’s threatening our technology leadership through intellectual property theft or forced technology transfer, we are hard at ensuring that we protect American property,” he said.
Miffed by Pompeo’s comments, China hit back saying that US is making allegations to cover up its unilateral protectionist policies.
Sensex dips 261 points, rupee hits 1-month low
MUMBAI: Stocks spiralled lower for the second straight day on Tuesday, while rupee slipped to one-month low.
The BSE Sensex plunged around 262 points to end at a two-week low of 35,286.74, while the broader Nifty dropped 89 points to 10,710.45. The NSE Nifty ended 89.40 points, or 0.83 per cent, lower at 10,710.45.
The rupee nosedived 39 paise to hit a near one-month low of 68.38 against the US dollar.
The RBI, meanwhile, fixed the reference rate for the dollar at 68.1511 and for the euro at 79.1575.
Bond markets, however, staged rebound and the 10-year benchmark bond yield finished a tad lower at 7.86 per cent as compared to 7.88 per cent.