The trade war finally started.
Using tariffs as a tool to contain China!
In the early hours of this morning, the United States fired the first shot of its trade war against China. US President Trump signed a memorandum, announcing that it will take measures to impose tariffs on Chinese products, limit Chinese investment, and apply relevant issues to the WTO dispute settlement mechanism.
The White House website and the U.S. trade representative office did not disclose the value of the tariff-added goods or increase the amount of tariffs, but foreign sources quoted relevant government officials as saying that the United States will impose tariffs on Chinese imports worth US$60 billion. This is the United States. According to a package of measures issued in response to China's 301 survey that it launched last year, the investigation raised many allegations regarding China's protection of intellectual property rights and technology transfer.
So, which Chinese imports will become tax targets?
Goldman Sachs believes that power tools and electrical appliances are at the top of the list. This is because the US has a significant trade deficit with China in these products. China imposes higher tariffs on such products imported from the United States, and imports from these products are used by consumers. It is relatively high. Goldman Sachs stated that for the same reason, consumer electronics such as sporting goods, toys, jewellery, and televisions are also ranked high. Air China navigation equipment, railway equipment, ships, furniture, and other Chinese imports are sold in the United States. The proportion of the total amount is smaller, it is ranked lower.
When considering the above rankings, Goldman Sachs first excluded the United States from having a bilateral trade surplus, while the remaining commodities were ranked by reference to the weighted average of the five standards: 1. US-China bilateral trade balance; 2. US-China tariff gap; 3. Ultimately Import share of use (usually consumption or investment), not used as intermediate investment in other industries; 4. Imported from China as a percentage of total domestic intermediate and final demand in the United States; 5. Whether this category is 'Made in China 2025' The focus of the report.
China started to fight back!
This morning, China started a counterattack and gave the first step of countermeasures.
On March 23, 2018, the Ministry of Commerce issued a list of discontinuation concessions for US imports of steel and aluminum products 232 measures and solicited public opinions, intending to impose tariffs on certain products imported from the United States, in order to balance the Aluminum products impose tariffs on losses caused by Chinese interests.
This list tentatively contains seven categories and 128 tax items. According to the 2017 statistics, it involves the US exports to China of about US$3 billion. The first part consists of 120 taxes, involving US exports of 9.7 billion US dollars to China, including fresh fruit, Products such as dried fruit and nut products, wine, modified ethanol, American ginseng, seamless steel pipe, etc., are subject to 15% tariff. The second part totals 8 taxes, involving USD 1.92 billion in US exports to China, including pork and products. , Recycling aluminum and other products, to impose a 25% tariff. If you consider that the U.S. Trade Representative's Office will formulate a list of China's imports that impose tariffs within 15 days, it is expected that China will propose a further countermeasure list accordingly. The goods will be based on the list proposed by the United States, and may maintain similar scale and amount of effort.
Protectionism poses a threat to global growth
In the article “Global Times Comment: Boycotting US Soybeans in China is Easy to Do”, he commented that Chinese people do not want to fight trade wars. This is a country that is willing to be kind to others and pay attention to prosperity. However, Trump’s government is arrogant and tells the truth. Some of China's popularity has gone. They need a lesson. More and more Chinese people are starting to think so badly. Chinese people have a saying 'Can't see the coffin without tears' if the Trump administration has to fight trade wars. Showing how thick the legs in Washington are, it will be a good time to fight. Who is afraid of them? The Chinese people's feelings of patriotism and collectivism are likely to have a role at that time, and the slogans that resist American autos and other major commodities may not work. It will ring through the Internet in China and get a response. It is not only the Chinese government that will fight back the US trade war. There will be many Chinese people willing to turn it into a 'People's War.' If you don’t believe it, try it.
Since taking office, Trump has been reducing the U.S. trade deficit as an important task. However, we do not understand whether the U.S.’s self-confidence in China’s trade war actually comes from.
Dr. Adam Posen, Dean of the Peterson Institute, a top economist, commented on President Trump’s protectionism measures: 'This is simply stupid, it is incompetence, corruption or misdirection!' Professor of Economics, Harvard University, USA According to Free Frankel, the reason why the United States has a huge and growing trade deficit is because of the huge and growing deficits in budgets and national savings. 'The collection of tariffs is not a good solution to this problem.'
Cao Dewang, chairman of Fuyao Glass Industry Group, said, 'If the United States wants to increase tariffs, 20% is not enough for 40%, and 50% I also support it. Because I will not sell you if I do not make money. My bottom line is here. I believe that as long as the United States With demand, tax increases are not a solution to the problem.
The "Sumter-Hawley Tariff Act" tried to protect the U.S. market with high tariffs and increased the tariffs of more than 20,000 kinds of imported products by an average of 50%. As a result, a trade war was triggered, which caused the Great Depression to last longer. The sharp increase in tariffs this time
This may be aggravated by the unreliable global economic recovery. The global economic outlook may be even more uncertain, and the globalization process may also encounter more twists and turns.
In an article, the Brookings scholar Warwick J. McKibbin predicted that if the tariff is increased by 10%, it will trigger a small global trade war, which will reduce the GDP of most countries by 1%-4.5%. Among them, the United States will lose 1.3%, China will drop 4.3%; if the tariff increases by 40%, it will trigger a global depression.