Wednesday, July 11, 2018

Trump Trades Blows, Con't

Trump's trade war has shifted into the scorched earth phase as today he planted a 60-day time bomb that will blow up in the faces of Republicans just in time for the midterm elections to heat up.

President Trump escalated his trade war with China Tuesday, identifying an added $200 billion in Chinese products that he intends to hit with import tariffs.

The move makes good on the president’s threat to respond to China’s retaliation for the initial U.S. tariffs on $34 billion in Chinese goods, which went into effect on Friday, and would eventually place nearly half of all Chinese imports under tariffs.

Administration officials said the tariff fight is aimed at forcing China to stop stealing American intellectual property and to abandon policies that effectively force U.S. companies to surrender their trade secrets in return for access to the Chinese market.

“These practices are an existential threat to America’s most critical comparative advantage and the future of our economy,” said Robert E. Lighthizer, the president’s chief trade negotiator.

Trump’s latest action will hit consumer products such as televisions, clothing, bedsheets and air conditioners, which were spared from the first import levies on Friday. But the new tariffs will not be imposed until the end of a two-month public comment period.

“This is where a painful situation gets more painful,” said Phil Levy, a former White House economist in the George W. Bush administration.

The current $34 billion in tariffs are going to hurt farmers and automakers especially, but the $200 billion coming August 30 will jack up prices for Chinese imports across the board and will quickly start damaging retailers and consumers everywhere in the US.

Early reaction to the president’s action was unfavorable. “Tonight’s announcement appears reckless and is not a targeted approach,” said Sen. Orrin G. Hatch (R-Utah), chairman of the Senate Finance Committee.

Beijing has vowed to respond in kind to any U.S. trade action. But China only bought about $135 billion in U.S. goods last year, meaning it will run out of American products to tax before it matches Trump’s latest move.

Chinese officials are expected to retaliate in other ways, hitting U.S. firms in China with unplanned inspections, delays in approving financial transactions and other administrative headaches.

“The Trump administration is gambling that by wielding such a big club, it will force China to back down,” said Edward Alden, a senior fellow at the Council on Foreign Relations. “That is almost certainly a serious miscalculation. China is far more likely just to find other ways to hit back in kind.”

The president has repeatedly described his resort to tariffs — which are paid by American importers — as a lever to extract negotiating concessions from U.S. trading partners.

A few rounds of talks with Chinese leaders this year made little progress, however, and no plans for additional meetings have been made public.

If these tariffs go through, the economic damage will be far higher than $200 billion.  Trump figures he can bully the Chinese in the same way he's bullied the EU, Canada, and Mexico, but the difference is the Chinese don't have to worry about the political fallout and they won't back down now

China fired back at President Donald Trump’s latest tariff barrage, saying it won’t back down in the trade war that was started unilaterally by the U.S.

China “never yields to threat or blackmail,” Vice Minister of Commerce Wang Shouwen said in written comments to Bloomberg on Wednesday. “The U.S. side ignored the progress, adopted unilateral and protectionist measures, and started the trade war.”

When Americans start getting laid off by the tens of thousands and the economy goes south within a matter of months, Trump won't be so lucky.

Unfortunately, neither will the American people.

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