Trump threatens to hike tariffs on $200B of Chinese imports

U.S. President Donald Trump talks to reporters during a meeting with Slovakia's Prime Minister Peter Pellegrini in the Oval Office at the White House in Washington, U.S., May 3, 2019. (REUTERS)
Updated 06 May 2019

Trump threatens to hike tariffs on $200B of Chinese imports

  • Last July, the Trump administration gradually began slapping import taxes on Chinese goods to pressure Beijing into changing its policies

WASHINGTON: President Donald Trump turned up the pressure on China on Sunday, threatening to hike tariffs on $200 billion worth of Chinese goods.
Trump’s comments, delivered on Twitter, came as a Chinese delegation was scheduled to resume talks in Washington on Wednesday aimed at resolving a trade war that has shaken financial markets and cast gloom over the world economy.
Trump turned up the heat by saying he would raise import taxes on $200 billion in Chinese products to 25% from 10% on Friday.
The Wall Street Journal, citing unidentified sources, said China’s government was considering canceling this week’s talks. Beijing has responded to previous US threats by saying it wouldn’t negotiate under pressure.
Stock markets fell on the news. The future for the Dow Jones Industrial Average lost 1.5 percent while Tokyo’s Nikkei 225 retreated 0.2 percent.
Trump had twice pushed back deadlines — in January and March — to raise the tariffs in a bid to buy more time for a negotiated settlement. But on Sunday, Trump, who has called himself a “tariff man,” said he’s losing patience. “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump tweeted.
In his tweets, Trump also threatened to slap tariffs on another $325 billion in Chinese imports, covering everything China ships annually to the United States.
The two countries are locked in a high-stakes dispute over China’s push to establish itself as a technological super power. The US charges that China is resorting to predatory tactics — including cybertheft and forcing foreign companies to hand over technology — in a drive to establish Chinese companies as world leaders in advanced industries such as robotics and electric vehicles.
The administration has repeatedly suggested that the negotiators are making progress. A month ago, Trump said that the two countries were “rounding the turn” and predicted that “something monumental” would be achieved in the next few weeks.
But last week, Treasury Secretary Steven Mnuchin seemed to temper expectations, suggesting that Washington was willing to “move on” if it can’t get the deal it wants.
A substantive deal would require China to rethink the way it pursues its economic ambitions, abandoning or scaling back subsidies to its companies, easing up on the pressure for foreign companies to share trade secrets, and giving them more access to the Chinese market.
Philip Levy, senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush, said the talks are too complicated for Trump’s high-pressure tactics to work. “The president treats this like we’re haggling over the price of a used car,” Levy said.
Trump has made a priority of shaking up American trade policy.
As a candidate for the presidency, Trump raged repeatedly about alleged Chinese perfidy — so much so that a video mashup of him spitting out the word “China” went viral and collected more than 15 million views on Youtube.com.
Trump charged that previous administrations, gullible and weak, had let China get away with abusive trade practices, accepting empty promises from Beijing and allowing the US-China economic relationship to grow ever more lopsided. As evidence, he pointed to America’s vast US trade deficit with China — $379 billion last year, by far the biggest with any country in the world.
Once he took office, Trump’s relationship with his Chinese counterpart, Xi Jinping, seemed to get off to a good start. The two men shared chocolate cake and amiable conversation at Trump’s resort in Mar-a-Lago, Florida, in April 2017. A few weeks later, China agreed to open its market US beef, cooked chicken, and natural gas in what Commerce Secretary Wilbur Ross called a “herculean accomplishment.”
The romance faded. In March 2018, the Office of the US Trade Representative issued a report accusing China of using predatory tactics to strengthen its tech companies.
Last July, the Trump administration gradually began slapping import taxes on Chinese goods to pressure Beijing into changing its policies. It now has imposed 10% tariffs on $200 billion in Chinese imports and 25% tariffs on another $50 billion. The Chinese have retaliated by targeting $110 billion in US imports.
The fight between the world’s two biggest economies is raising worries about global economic growth. The International Monetary Fund, the World Bank, and others have downgraded their forecasts for the world economy, saying the US-China standoff is reducing world trade and creating uncertainty for companies trying to decide where to buy supplies, build factories, and make investments.
Trump has portrayed his tariffs as a moneymaker for the United States and a benefit to the US economy.
But a March study by economists from the Federal Reserve Bank of New York, Columbia University, and Princeton University found that the burden of Trump’s tariffs — including taxes on steel, aluminum, solar panels, and Chinese imports — falls entirely on US consumers and businesses who buy imported products. By the end of last year, the study found, they were paying $3 billion a month in higher taxes and absorbing $1.4 billion a month in lost efficiency.
Nonetheless, the overall US economy has remained healthy. On Friday, the government reported that the US unemployment rate had fallen to the lowest level in half a century.
The prospect of higher tariffs and heightened tensions could alarm investors when markets open Monday. “When the president puts his foot down, it makes the market go down,” Chris Rupkey, chief financial economist at MUFG Union Bank, wrote in a research note Sunday. “Tariff man is back just in time to make the stock market dive, dive, dive.”


Saudi Arabia raises more than SR15bn in bond sale

Updated 28 March 2020

Saudi Arabia raises more than SR15bn in bond sale

  • Gulf oil exporters are increasingly turning to debt sales to help fund spending in a low oil price environment

JEDDAH: Saudi Arabia has sold more than SR15 billion in Islamic bonds, as the Kingdom seeks to develop its local debt market.

The Kingdom’s Finance Ministry said on Friday that it had closed the book to investors on its March 2020 riyal-denominated sukuk program.

The total amount raised by the sukuk sale was SR15.568 billion, divided into three tranches that mature in five, 10 and 30 years.

Gulf oil exporters are increasingly turning to debt sales to help fund spending in a low oil price environment while at the same time developing their own capital markets as part of ongoing diversification reforms.

“The closure of the issuance of government bonds exceeding 15 billion riyals shows many positive elements,” said Abdullah Ahmad Al-Maghlouth, a member of the Saudi Economic Society. 

“Such as confirming the robustness of the Kingdom’s credit rating and the strength of the Saudi economy; that the Kingdom’s debt-to-GDP ratio is still far lower than many other G20 countries; the Finance Ministry’s ability to deal with the requirements of asset and liability management; as well as the Kingdom’s strong foreign-exchange reserves in dollars, among others.”

The Kingdom’s strong credit rating means it can borrow more cheaply than many other Mideast economies despite a weaker oil price.

Economic analyst Fahd Al-Thunayan said: “The Ministry of Finance, represented by the National Debt Management Center, continued its efforts in developing local debt markets and providing the required balance in financing public-budget expenditures, through the optimal mixture of the use of reserves and borrowing within the upper limits, like a percentage of the GDP, where the local issuances reached 65 percent of the total debt in the year 2019.”