Trump's fresh tariff attack threatens China's fragile economy

Copyright © HT Digital Streams Limit all rights reserved. Rates on Chinese goods are paid by US importers, but this can injure China’s factories by increasing the cost of manufactured products for Americans. (Bloomberg) Summary Beijing has already seen slowly before Trump announced the 100% latest tariff increase, part of a trade war that China blamed on the US for thousands of manufacturers across China, which is Déjà vu-with implications for the country’s fragile economy. Earlier this year, after President Trump raised rates on Chinese goods to 145% in April, US customers of Alan Chau’s toy factory in southern China suddenly frozen orders, causing a cash crisis to bring his business to the point. So it came to light when the US and China reached a trade statement weeks later in mid-May, and most of their rates rolled back on each other-and allowed Chau to re-send its products. Now, less than six months later, high rates can be the reality for chau and tens of thousands of other factory owners who make China a global manufacturing power. Trump said on Friday that he would impose a 100% extra rate on all Chinese goods, effectively on November 1st. “It’s literally an embargo,” Chau says. “Who’s going to do business with China?” After months of trade conversations in which US officials expressed cautious optimism about a breakthrough, the White House was caught off guard when Beijing sparked a barrage of measures over the past few days, with a variety of tools in its arsenal, including the tightened export restrictions on the rare veins. On Sunday, Beijing Washington blamed him for the first time he made new restrictions against China after the latest round of trade talks in September. “Threatening high rates are not the right approach to China,” the Beijing Ministry of Trade said in a statement. The ministry said that the new restrictions on the rare nature would only have a limited impact on global supply chains, and that relevant countries had been notified before the Thursday announcement. It is also said that the new rules were not an export ban, but rather a set of export licenses requirements. So far this year, strong exports have helped China’s economy to protest the expectations of a deeper slump, as manufacturers have made a higher barrier for trading with the US by increasing the shipping to the rest of the world. For the first eight months of the year, China exports to the US fell more than 15% from the same period a year ago, while total exports according to the Chinese Customs data grew by 5.9%. But export growth delayed in August and governments around the world complained about cheap Chinese goods that flooded their markets. Meanwhile, the momentum in other parts of China’s economy, such as consumer spending and investments, has mitigated in recent months. Beijing launched a campaign to promote production and to end the price wars of the spiral formation, which weighs economic growth in the short term. “The strength of China’s overall exports, despite the fact that US tariffs made XI possible to take the risk of an escalation in the trade war with the US,” said Eswar Prasad, professor of trade policy at Cornell University and a former international monetary fund official. “This approach could fire back, given the constant poor domestic consumption demand of China, as well as increasing concern in other countries over being overwhelmed by Chinese exports,” he added. Rates on Chinese goods are paid by US importers, but this can injure China’s factories by increasing the cost of manufactured products for Americans. This, in turn, can cause our buyers to move purchases outside China and lose Chinese manufacturers business. If the trading rod worsens significantly, it could jeopardize China’s prospects to reach its official goal of about 5% in gross domestic product. Officials do not seem to be concerned yet, offering little sign that the government is preparing to start more powerful stimulus measures. Chau, whose toy manufacturing business is called GSNMC, said its clients are shocked by the latest innings and monitoring of the development to see if production should interrupt. He has one order of toys with Christmas theme that is already on their way to the US, which must come before the new tariff rate will come into effect, but other contracts in the works are now in danger. A worker produces Christmas decorations for exports at a factory in Zhejiang Province, China. The loss of future orders would be devastating for Chau’s business, which has already seen revenue shrank by about half this year compared to last year, even after reducing rates for Chinese toys to about 30%. Eventually, he can move a little manufacturing to Southeast Asia, so his customers can avoid the higher rates on Chinese goods, something he examined earlier this year but gave up after the tariff resistance made China again. Adam Dai, founder of fireworks editor Miracle Fireworks, who is located in the Central China Chinese Province Hunan, said some US clients have already issued and asked for their consignments to be held. They wait a few days to judge the situation before deciding to continue, he added. If the additional tariff comes into effect, it expects his business to be very affected as in April. The US relies on China for its fireworks, with about 99% of its imported consumer supplies and 75% of its fireworks for shows from China, according to the American Pyrtechnics Association and the National Fireworks Association. After many manufacturers struggled with the earlier round of high rates, a local fireworks association urged exporters to consider diversifying beyond the US market, Dai said. But such shifts did not come easily. “I’m sure all the customers will keep the consignment. Then there will be no shipping from China to the US,” Dai said. “If this policy lasts for a long time, we will have to stop production and wait.” Others do not count on the 100% rates to last long – if they come into effect at all. Some analysts believe that the US and China can unknowing tensions before the penalty measures come into effect. Trump and Chinese leader Xi Jinping were planning to meet at the end of the month at a regional meeting of leaders in South Korea. Dan Wang, a director of the China team at the political risk consultant firm Eurasia Group, said the rates of the US tariff, a director of the China team at the political risk consultant firm Eurasia Group, said how tariffs were rolled back earlier this year, amid the volatility and concerns of US companies. “Judging by Trump’s track record, he wants an agreement in which China will pay rent to enter the US market, not excessively high rates on China causing full disconnection.” Jeffy Ma, who runs a hat manufacturer in Guangzhou, called Ace Headwear, monitored the situation and was waiting to hear if his customers would stop for the US orders for now. Despite the tariff, his income did not decrease. One customer has transferred a few orders for the US to other countries with lower tariff rates. But Ace Headwear compensated the lost business with new clients from Europe, South Korea and elsewhere. Earlier this year, the company of MA reduced prices by about 4% to provide its customers, which included Fila, some tariff relief, but could no longer reduce prices due to already razor-thin profit margins. Mom, for one, believes the 100% tariff is a negotiating tactic and will be rolled back by November. “Both sides increase their bargaining chips,” he said. “Such high rates cannot continue to exist.” Write to Hannah Miao on [email protected] and Yoko Kubota at [email protected] Catch all the business news, market news, news reports and latest news updates on live currency. Download the Mint News app to get daily market updates. More Topics #china #Make Read Next Story