Can China beat Trump in trade war? They think so!

Nellie Chapman
April 13, 2018

Investors were unnerved by President Donald Trump's threats of tariffs on an additional $100 billion in Chinese imports as the USA president hit out at China's "unfair retaliation" to a prior Trump announcement of $50 billion in tariffs on Chinese goods. Though Xi's speech did not specifically mention the US, his comments were met with optimism that a trade war could be averted.

"China is ready to fight back with all options on the table", said Ruan Zongze, a former diplomat and senior fellow at the Chinese Institution of International Studies. "If you have a problem in a trade with the United States, he knows that he's got to intimidate us, so he's going to use all of his power and authority to go after us, so this could get ugly". A trade deficit means that one nation exports more goods to one country than it imports from that particular country, which, given the structure of the US compared to that of China, is to be expected.

Any trade war between the United States and China is worrisome, but if it escalated and tariffs are imposed, it will hit Washington particularly hard.

In March 2018, Trump signed a proclamation that would see the implementation of new trade policies.

From a trade war with China to USA military action in Syria, President Trump's proposed policies and tweets continue to stir uncertainty for investors whose buying and selling have been sporadic in recent weeks.

While this particular steel pipe is manufactured in the pro - Trump state of Texas, it is not expected to have much of an impact on the export of these products. Trump responded in a tweet saying he was "thankful" for Xi's remarks on tariffs and access for US automakers, and said both countries would "make great progress together".

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On Wednesday, China threatened 25% tariffs on agricultural products, aircraft and automobiles, potentially impacting $50 billion worth of US exports to China.

Then, on April. 9, the Dow climbed more than 400 points on the heels of news that Larry Kudlow, Trump's chief economic adviser, told reporters at the White House that the country was not in a trade war with China.

U.S. Treasury debt prices were little changed ahead of another set of large auctions this week. The continuous recent downward movements in world stock markets, including the ones in the USA and China, show what a nervous atmosphere prevails.

The Dow Jones Industrial Average .DJI rose 46.34 points, or 0.19 percent, to 23,979.1, the S&P 500 .SPX gained 8.69 points, or 0.33 percent, to 2,613.16 and the Nasdaq Composite .IXIC added 35.23 points, or 0.51 percent, to 6,950.34.

Netizens are extremely sceptical of Trump's truce and question his motives for his tit-for-tat behaviour on tariffs and then for his seemingly amiable Tweet.

The possibility of a trade war also comes as the Trump administration prepares to meet next month with North Korean leader Kim Jong Un about ending his illicit nuclear weapons program. "However what happens will not be decided by the US side only". He also wants to cut into our $50 billion trade deficit with China.

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