US-China trade war escalates

The on again, off again trade war between the US and China is escalating, with more tariff threats from both countries.

Trump aims to hit China as tit-for-tat tariff war erupts

A top U.S. trade adviser said China has underestimated President Trump’s resolve to press ahead with tariffs, in comments that undercut the chances of settling a looming trade war between the economic superpowers.

The threat of a growing trade conflict with China hit financial markets hard, with Beijing vowing a firm response after Trump on Monday said he would implement tariffs on an additional $200 billion of imports from China if Beijing went ahead with reprisals over an initial set of U.S. tariffs.

White House trade adviser Peter Navarro, a sharp critic of Chinese trade actions, said China has more to lose from any trade war.

“The fundamental reality is that talk is cheap,” Navarro told reporters on a conference call, again accusing China of “predatory” trade policies.

When it comes to stoking a major trade war talk could be quite expensive to both countries, and potentially to others including New Zealand.

The threat of new tariffs against China pits the world’s two largest economies against each other and looks set to disrupt global supply chains for the tech and auto industries, two sectors that rely heavily on outsourced components.

In total, Trump has now threatened up to $450 billion in Chinese imports with tariffs, including another $200 billion in Chinese goods if Beijing retaliates after the step Trump announced on Monday.

Mounting concerns over the U.S.-China dispute sent global stock markets skidding and weakened both the dollar and the Chinese yuan on Tuesday. Shanghai stocks plunged to two-year lows.

The Dow Jones is still trading in the US Tuesday and is currently down 1.18% for the day. That isn’t a drastic drop.

This could all have significant impact in this part of the world – From the Aussie to soybeans and cars: what’s at risk in a trade war?

The Aussie dollar takes a thumping, soybean prices swing and German carmaker shares are stuck in reverse.

Countries with open economies reliant on global trade are most at risk when disputes over international commerce hit.

The Australian dollar ticks those boxes. Australia counts China as its biggest trading partner and its currency is heavily correlated to global growth. Many investors see the currency, known as the Aussie, as a better global trade bellwether than the Canadian dollar, which has been buffeted by negotiations over NAFTA, the North American trade pact.

This week, the Aussie fell to its lowest level in 13 months, and the positioning of options signal more weakness ahead.

If Australia is badly affected that must have an impact here. New Zealand is also at risk directly with US and Chinese trade upheaval.

8 Comments

  1. Blazer

     /  June 20, 2018

    NZ will always be a mere bystander when these matters arise.

    Trump has managed to alienate Canada,Mexico and Europe as well as China
    .
    This could backfire big time.
    Cutting the U.S out of deals is the way forward.
    Such repercussions will have Trump posturing and sabre rattling.
    The hypocrisy of the U.S supposedly being the nation of freedom,democracy,and free trade is crystal clear.
    Isolation and the fortress mentality favours countries like NZ,that have ample food,water and power.
    Japan,China and alot of Euro countries will suffer.Sth America and Africa always suffer,regardless.

    • Zedd

       /  June 20, 2018

      methinks MrT has no idea about ‘traditional allies/trade partners’
      Sounds like he thinks ‘Green is Greener’ with other ‘new friends’/real estate development opportunities ?

      NZ needs to look beyond his/others short term ‘hair brained schemes’

  2. Alan Wilkinson

     /  June 20, 2018

    Trump knows this will force change. He’s happy with that. NZ has to keep out of the way of the big feet but should be ok so long as the Govt doesn’t get any delusions of grandeur.

    • Gezza

       /  June 20, 2018

      I agree with Blazer above. Isolating the US from international trading deals is the best way to respond to its threats. When its products are too expensive knock offs will do.

      • Zedd

         /  June 20, 2018

        maybe we/others should just stop buying; Coca-Cola, KFC. MrCrap, Starbucks etc. & invest in our own ; softdrinks, chicken, takeways/hamburgers & coffeeshops !

        Frankly I avoid them ALL.. & support ‘Buy Local’ products

        I wonder why USA beer isn’t more popular here ?
        no need to get any ‘weiser’ it tastes like BudCRAP !

        • Gezza

           /  June 20, 2018

          Yanks eat barbecued ribs. FFS. WTF for?? 🙄

          • Kitty Catkin

             /  June 20, 2018

            I think that you will find that the MacDonalds etc are NZ-owned franchises and the profits stay here.

            I can see no sense in eating ribs (someone I knew said that they looked as if someone else had had a go first) but still less can I see why the very name of pork belly isn’t enough to put anyone off. I had it once when I ate meat and couldn’t eat it, it tasted like fat. Even cutting off every bit of fat was useless, the meat iself seemed permeated with it. It was disgusting.