Asian markets sink as Trump slaps ban on Huawei, ZTE

May 16 06:27 2019

“As long as China shows a commitment to this, I believe the outlook is still broadly positive”. Those are the people who notice.

That’s because if the United States and China continue to escalate their trade sanctions, China may start putting more restrictions on USA corporations doing business in China, such as General Motors or Boeing.

The two governments have given themselves a few more days to make peace before their latest tariff hikes hit.

China apparently didn’t think Trump would do so.

Meanwhile, U.S. consumers will end up paying more as a result of tariffs on China, just like Chinese consumers will pay for goods if their government puts tariffs on U.S. goods, he added. Although the new tariffs were highly anticipated, USA stocks sold off sharply as investors sorted out the details.

But Mr Xi sees United States demands as an infringement on Chinese sovereignty and wants to maintain the momentum, created by globalisation, which has seen China profit handsomely in a 20-year economic growth explosion. The sell-off accelerated on Monday after China announced plans for retaliatory tariffs.

“China’s economy is fundamentally different- even unique”, Mark Wu of Harvard Law School wrote in an influential 2016 paper.

“Make your product at home in the US and there is no Tariff”, Trump wrote in a series of tweets this week, adding, “My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense”.

Mr Trump, who has railed against what he describes as China’s unfair trade practices and threatened to impose punitive levies on all its imports, softened his tone in a series of remarks on Tuesday expressing optimism about reaching a trade deal with Beijing.

Analysts say the slump could prompt China to take more action to boost activity in the world’s second biggest economy asincreased United States tariffstake effect after a breakdown in trade negotiations.

Laptops, tablets and phones may be affected by tariffs on goods imported from China.

Even at a higher cost, American firms and businesses are still choosing to buy Chinese in copious volumes.

Mnuchin’s remarks dovetailed with a cooling of the Trump administration’s rhetoric toward China after another round of tit-for-tat tariffs between the world’s two largest economies and a selloff on global stock markets.

There is unease in the U.S. Congress about the potential fallout of tariffs on the broader American economy. As my American Enterprise Institute colleague Derek Scissors points out, our low rate of inflation neutralizes much of the costs of higher prices from tariffs, which will diminish over time.

Trump has stepped up pressure on Beijing by threatening to impose tariffs of up to 25 percent on an additional $300 billion worth of Chinese products, a move that – together with duties imposed so far – would see almost all Chinese imports taxed.

Both governments indicated more negotiations are likely. That does not mean China will buckle easily.

In making the case that China is unlikely to fundamentally change, Jacobson notes that every law in China includes a proviso that makes clear it is subject to interpretation by Communist Party officials.

Stabenow wasn’t optimistic that the economic pain would prompt Republicans to challenge Trump on trade through legislation. He is right to take a hardline stance.

“The anti-Chinese sentiment in the United States seems to be rising fast and I fear that the U.S. would start challenging China on all fronts”, he says.

Mr Trump described the dialogue with China as “very good”, and touted his “extraordinary” relationship with Mr Xi.

Trump9-GageSkidmore-Flickr

Asian markets sink as Trump slaps ban on Huawei, ZTE
 
 
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