Published: Mon, April 09, 2018
Entertaiment | By Simon Arnold

Trump supporters could lose big in trade war

Trump supporters could lose big in trade war

Nikita Maslennikov, an analyst at the Institute of Contemporary Development (INSOR), told Sputnik that even as the USA and China engage in a tit-for-tat tariff exchange, it feels more like an invitation to the negotiating table rather than the beginning of an actual trade war.

The growing battle of tit-for-tat exchanges of tariffs between the USA and China has raised fears of a possible trade war that could have a damaging economic impact globally.

China's Commerce Ministry spokesman, Gao Feng, calling the U.S. action "extremely mistaken" and unjustified, said the spat was a struggle between unilateralism and multilateralism and that no negotiations were likely in the current circumstances.

In a trade war, USA consumers would probably see higher prices on TVs, shoes and other "made in China" items at stores, the stock market would continue to sink, and businesses might decide that they don't want to make as many new investments after all, because they don't know what the tariff situation is likely to be in the coming months. Responding to the Trump administration's controversial tariff on steel and aluminium, China has proposed tariffs on 128 United States products worth $3 billion. China can not retaliate in kind since it only imports $130 billion in USA products, meaning it would have to find another way to respond. Placing duties on these goods could inflict significant pain on Chinese manufacturers, but also on USA consumers, and also the American, South Korean and Japanese suppliers who provide components to China-based contract manufacturers like Foxconn.

On Tuesday, President Trump announced another $50 billion in tariffs against Chinese products, which the Chinese matched that night with $50 billion in tariffs against us products, including automobiles, airplanes, whiskey and a slew of agricultural products including beef, pork, corn, sorghum, cotton and soybeans.

Is it possible that the US could actually benefit from a tariff war? The Dow fell more than 570 points, or 2.3 percent.

Chinese state media slammed Mr Trump's threat of more trade action against China as "ridiculous".

Asked in an interview with NY station WABC about the effect on USA stock markets, Mr Trump said the market has gone up (since he took office) "so we might lose a little bit of it".

The US and China have announced tariffs on each other's goods recently, and have threatened to impose more.

National Retail Federation President and chief executive Matthew Shay said Mr Trump should "stop playing a game of chicken with the U.S. economy". "Trade deficit" sounds bad, but a trade deficit makes up a large chunk of the United States current account (payments flowing out) and is offset by the USA capital account (payments flowing in).

However it added a full-blown trade war "would have a more pronounced effect".

While US officials said they were prepared to talk the issues through with China, there was no clear path to negotiations.

But top White House economic adviser Larry Kudlow reversed himself and warned that the tariff threat is not a negotiating tactic.

US manufacturing giants that sell products in China, such as Apple, Boeing, Caterpillar, General Motors and Intel, are also expected to take a hit if China follows through on its threats. He, added, "The trade balance is decided by market forces, and USA economic policy and structure". So far, it has confirmed tariffs on just $6 billion worth of Chinese imports-steel, aluminum, washing machines and solar panels. There is still time for negotiations and opportunities for a mutually face-saving deal, though the uncertainty in the meantime is likely to be extremely damaging.

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