The trade turbulence between U.S. and China

23 July, 2018, 02:26 | Author: Regina Silva
  • Trump flags and hats made in China are reportedly being held up at customs as trade war heats up

The Wall Street Journal's Grep Ip explains why Trump's anti-Fed outburst is in no one's interest, least of all his own. Trump has slapped tariffs on imported steel and aluminum, provoking retaliatory measures by Canada, Mexico and US allies in the European Union.

Gentex Corp (GNTX.O), which makes automatic-dimming rear view mirrors, said it expected cost increases of between $5 million and $8 million for the second half of 2018 related to its planned purchases of raw materials from China. The United States then disputed the retaliatory tariffs at the World Trade Organisation on Monday, along with those the European Union, Canada, Mexico and Turkey imposed in response to new U S duties on steel and aluminum.

"We're in a world of firsts and tweeting about the Fed, not once, but twice, doubling down, that the president is trying to exert pressure", said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group LLC in Pittsburgh.

In an interview with CNBC television broadcast Friday, Trump bluntly threatened to slap all Chinese imported goods with tariffs, saying the USA has been "ripped off by China for a long time".

Brookings Institution Fellow Joseph Parilla said governors don't decide US trade policy but can engage in direct economic diplomacy to encourage investment, while funding things like education and research at home.

New Mexico Farm and Livestock Bureau President Craig Ogden said retaliatory Chinese tariffs on USA pecans and new tariffs from Mexico on US cheese products are likely to hurt producers in New Mexico.

Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports. return, China levied taxes on the same value of U S products.

Trump said the U.S.is "being taken advantage of" on a number of fronts, including trade and monetary policy.

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After a decent run to the upside this week the U.S. dollar has fallen back sharply today, largely as a result of last night's comments from President Trump, where he was critical of the Fed and the recent strength in the currency. The growing share of worldwide trade under threat-including the tariffs on autos and auto parts now under consideration-could harm the global economy by disrupting manufacturing supply chains, raising prices and causing firms to hold off on new investments.

By sheer dollar volume, the Chinese won't be able to come close to the United States in a tit for tat battle. "I want them to do well", he said. The Global Times, which is called the mouthpiece of the government of China, has said that coming to India with the trade war in America will prove to be a risky move for them. The US Dollar Index tumbled on the back of the news, reversing what was a short-term uptrend, to post a 0.7 per cent loss.

"The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals", Trump said on Twitter.

Unlike the dollar or euro, the yuan does not float freely against other currencies.

The yuan weakened nearly 1% against the U.S. dollar on Thursday to hit its lowest level in a year.

"Currency is now part of the trade war, folks", said Greg McKenna, market strategist at AxiTrader.

The U.S. Federal Reserve is raising interest rates while Beijing eases access to credit to support cooling economic growth.

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