Friday, July 6, 2018

Trade wars have begun as U.S. triggers global event through initial salvo of $34 billion in tariffs

On July 6 the rhetoric finally ended and the Trade Wars have begun.

At the start of Friday trading over in Asia, a series of tariffs were kicked off by the United States against China to the tune of $34 billion.  Shortly after, China retaliated with their own tariffs of the same amount, suggesting that for now escalation will be done on a case by case or tit for tat basis.

Just hours after the United States introduced 25 percent trade tariffs on $34 billion worth of Chinese goods, Beijing has retaliated with mirror measures against American imports. 
“After the United States introduced the new tariffs, China's reciprocal measures also immediately took effect,” said the spokesman for the Chinese Foreign Ministry Lu Kang. He did not specify the amount or types of the US goods that will be taxed by China. 
China's commerce ministry earlier said the country has no choice but to fight back after the US "launched the largest trade war in economic history." Beijing also accused Washington of breaching trade rules of the World Trade Organisation (WTO). – Russia Today
Perhaps the most interesting caveat in this initial salvo by Washington is that they left out Europe, Canada, and Mexico from tariffs as it appears the chance for continued negotiations with these regions are still viable.

However there was one country that decided to make its own statement against the U.S. by standing firm with their ally China, and sending a strong message to President Trump just a few weeks before they are to meet at a Summit.
Moscow has raised tariffs from 25 to 40 percent on some US imports in response to Washington’s move to impose tariffs on Russian steel and aluminum. 
"Compensating measures apply as additional, higher rates of import duties from 25 to 40 percent of the price of imported goods. They will cover certain US goods, whose alternatives are produced in Russia," Economic Development Minister Maksim Oreshkin said, as quoted by TASS news agency. 
"In particular, measures apply to certain types of road construction machinery, oil and gas equipment, metalworking and rock drilling tools and optic fiber," he added.  - Russia Today
With Donald Trump now committed to a trade and tariff war which historically has not gone well for the world economy in previous occurrences, the President has staked a great deal on his ability to coerce nations to have to renegotiate what has been a 20-30 year benefit in their favor.  But with a trade deficit that continues to edge closer to $1 trillion per year, and agencies like China and the EU so reliant upon exports to sustain their economies, this may be the best time for Trump to initiate this gambit especially since the U.S. has much less to lose while they still have control over the global monetary system.


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