Monday, 24 September, 2018

Stocks open lower on escalating US-China trade dispute

A man chooses bananas near imported apples from the United States at a supermarket in Beijing on Monday A man chooses bananas near imported apples from the United States at a supermarket in Beijing on Monday. Associated Press Andy Wong
| 05 April, 2018, 01:46

The sell-off was triggered after China announced a list of USA products that might be subject to a 25 per cent tariff in retaliation for us tariffs on $50 billion of Chinese goods.

Adams, of PNC Financial, said the tariffs would be especially painful for companies in agriculture: machinery makers in the US would pay more for imported components, and they wouldn't sell as much food in China because their products would be more expensive.

The tariffs aren't final yet, and the Trump administration has indicated it's open to negotiations with China.

The Information Technology & Innovation Foundation (ITIF), a US technology think tank whose board includes representatives from top companies such as Apple Inc, Amazon Inc, Cisco Systems, Google, and Intel Corp, said in a submission to the USA government during the tariff investigation that 10 percent duties levied on Chinese ICT imports would slow the growth of US output by $163 billion over the next 10 years.

China's Ministry of Commerce said that it planned to slap 25 percent levies on a range of USA goods worth about Dollars 50 billion.

The Chinese Customs Tariff Commission of the central cabinet, in a retaliatory measure, chose to impose additional tariff of 25 per cent on 106 products under 14 categories worth $50 billion, the Ministry of Finance said in a statement.

The biggest worry for investors is that an escalating trade war will derail a global economy that has gotten to a point where it's largely growing in unison.

Stocks remain lower on Wall Street amid an escalating trade dispute between the US and China but have pared some of their sharp early losses.

The Bernstein team raised the question of whether the threat of a US-China trade war could "nudge the Germans toward localisation" - that is, moving production to China.

Experts say that Chinese hackers, widely viewed as among the most sophisticated, have shifted their operations so as not to explicitly violate the agreement while still maintaining a presence in US networks. "I have to say that China was forced to take the countermeasure and it has reacted with restraint", Chinese Vice Commerce Minister Wang Shouwen told a press briefing. "We would like to see China change its actions and we'd like to see them move in a more market oriented direction".

"What China needs to do now is to make the United States pay the same price" so Americans "understand anew the Chinese-U.S. strength relationship", the newspaper said. The Russell 2000 index of smaller-company stocks gained 19.51 points, or 1.3 percent, to 1,531.66.


These policies bolster China's intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as "Made in China 2025", according to USTR.

Among industrial companies, CRRC Corp, the Chinese train maker that's been expanding overseas, could feel the heat.

Industries including aerospace, information and communications technology, robotics and machinery were among those targeted by the US trade representative on Tuesday.

Tariff tensions: Beijing and Washington detailed plans to hike tariffs on a broad swath of imported goods from each other, in a series of rapid fire announcements over less than 24 hours. There has also been a surge of new activity of Chinese hackers targeting Western think tanks, USA law firms and the US maritime industry.

As for the scuffle with China, Kotok said he's hopeful that much of this is bluster from the Trump administration.

The list got an initial scrub to remove products identified as likely to cause disruptions to the USA economy and those that needed to be excluded for legal reasons, with remaining products ranked based on impact to consumers.

Chinese premier Li Keqiang said last month that China would improve conditions for foreign companies, bringing down overall tariffs for imports, and open up manufacturing to foreign investors with no requirement for technology transfer.

Affected products will include a wide variety of agricultural products such as soybeans, corn, beef, orange juice and tobacco. They'll be eager to pick up any lost business, but they won't be able to completely replace USA trade. The trade is worth about US$14 billion.

In another warning move, Chinese regulators launched an anti-dumping investigation of US sorghum last month as rhetoric between Beijing and Washington heated up.

While US farmers can benefit from healthy Sino-US economic ties, the export amount to China was too big, he said.

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