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US and China stumble into trade war with Donald Trump’s punitive tariffs

WASHINGTON: The United States and China tipped into punitive tariff territory even as they continue talks to avert an all out trade war. The Trump administration hiked taxes on $200 billion worth of Chinese exports from 10 per cent to 25 per cent after expiry of a Thursday midnight deadline to reach an agreement, even though president Trump said he had received a “beautiful letter” from Chinese president Xi Jinping whose message he said was “Let’s work together. Let’s see if we can get something done.”

Teams from the two countries are meting again on Friday morning to continue talks even as Trump warned that he would slap more tariffs on the balance of the $540 billion in annual Chinese imports if there is no deal. Beijing has warned of retaliatory tariffs on the much smaller volume of American imports, saying it will take “necessary countermeasures,” while expressing “deep regret over the development.”

Trump had twice earlier delayed tariff increase to give negotiators time to arrive at an agreement that from the US side calls for structural changes in China’s state-led economy and massive purchases of American products (that China doesn’t particularly want) in order to bridge the trade gap.

The outcome of the US-China trade negotiations will also affect European Union and India among other countries (which are locked in their own relatively minor skirmishes with Washington over tariffs and trade deficits), because a Trump administration emboldened by victory could become an even meaner negotiator.

Trump is also facing crises in several other parts of the word, including with Iran, Venezuela, North Korea, and in the Middle East, but he insists to his supporters that everything is fine and dandy and America has never been in a better place with a brighter future than during his presidency.

The president boasts of about how US coffers will be overflowing with tariff revenues if China does not agree to a deal although many economists and trade experts say the tariffs will be paid by US importers of Chinese goods and eventually by American consumers. “Tariffs will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind,” Trump tweeted.

A series of tweets followed on Friday morning even as US negotiators, Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer, resumed talks with visiting Chinese counterparts who have largely kept their negotiating position in private domain.

“Talks with China continue in a very congenial manner – there is absolutely no need to rush – as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the US….The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars,” Trump wrote, aggressively and publicly underscoring the US position in the middle of the talks.

“The US only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance. With the over 100 Billion Dollars in Tariffs that we take in, we will buy…agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance. In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!” he explained.

“We have lost 500 Billion Dollars a year, for many years, on Crazy Trade with China. NO MORE!” Trump added.

News credit : Indiatimes