United States stocks jump as investors reassess trade war risk

Virginia Carson
April 7, 2018

The latest move on the trade war happened on Wednesday, April 4, when China proposed a fresh set of tariffs on dozens of American products, including soybeans, aircraft and cars. President Donald Trump's top economic adviser, Lawrence Kudlow, suggested the US tariffs won't be implemented if China lowers barriers to trade.

The clash reflects the tension between Trump's promises to narrow a U.S. trade deficit with China and the ruling Communist Party's development ambitions.

Beijing has been adamant that it did not want a trade war, but that it would not not back down under U.S. pressure.

According to Politico, a European Commission spokesman said: "The EU fully shares the United States concerns as regards the need for greater reform and market openness in China".

Trump always stressed bringing the USA's lost jobs back home and asked the department of commerce to probe whether importing steel from China and other countries would hurt America's interests. The government later estimated that such theft by China made the USA lose between $225 billion and $600 billion each year. First, China is the biggest buyer of United States debt.

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"It will probably be a mixture of the three, of course, but overall I would say we will see a decline", he said.

"Business Roundtable agrees with the Administration's concerns regarding China's unfair trade practices, including theft of intellectual property, restrictions on foreign investment, and policies that foster unfair competition", the association of CEO's said. As a response, Chinese authorities announced plans to levy heavy tariffs on 128 U.S products, which include pork, soybeans, and airplanes.

Kamiyama notes that the USA tariffs are still small compared to total imports from China, which came to $433 billion in 2017, according to Chinese data.

Asian stock markets rebounded Thursday from sharp losses triggered by escalating trade tensions between the world's two largest economies.

WALL STREET: U.S. stock markets finished higher on Wednesday after a sharp plunge in the previous session.

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"I'm going to take a hard look at what the president has proposed". If implemented, China's retaliatory tariffs, on products such as soybean, whisky, orange juice and cars, would hit the USA where it hurts; 60% of US soybean exports go to China. The last two options could hurt China as much as the USA, which is why Garcia Herrero thinks they are unlikely to happen.

So far, no tariffs have actually been imposed.

The complaint is valid, but a trade war would be a reckless overreaction.

The move comes after Washington slapped almost 1,300 Chinese goods with 25-percent tariffs.

A Standard Chartered report estimated that U.S. GDP could fall 0.2 percent if China retaliates by banning U.S. food and transport imports, and 0.9 percent if all imports are banned.

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