China will not fire first shot in China-US trade war

Daniel Fowler
July 11, 2018

Prosecutors said AMSC lost 700 jobs and more than $1 billion in shareholder equity after Sinovel stole technology, including software, used in producing and operating wind turbines.

"Attempted corporate homicide" is what CEO Daniel McGahn called it. In particular the US Smoot-Hawley tariffs enacted in 1930 are thought to have inspired a trade war, and led to a massive decline in global trade.

To the Trump administration, Sinovel's predatory practices are hardly isolated. Mary Lovely, economics professor at Syracuse University, says that roughly 60 percent of U.S. Washington does not have the right to ask Beijing not to develop something and it is impossible for China to listen to its command...

White House spokeswoman Sarah Huckabee Sanders, responding earlier this week to a question about how the winning the trade battle: "The President is focused not on the short term but on the long term, and he wants to make sure that we're doing things that help protect American workers and protect American industry". "We've awakened. ... This is a fundamental change".

They predict China will defy an array of USA tariffs set to take effect Friday and will retaliate immediately.

Besides the initial tariffs from the two largest economies, traders are anxious that the trade war could escalate further in the days to come.

Late Friday, China announced it was expanding its existing complaint against the United States at the World Trade Organization, hours after the countries slapped tit-for-tat tariffs on billions of dollars of cross-border trade.

US pork producers now face punitive tariffs of 62% on exports to China, a market that represented 17% of total USA exports by value in 2017.

"There is no way to meaningfully influence Chinese behavior on intellectual property without coordination among like-minded advanced nations, and presently there is nearly none", said Daniel Rosen of the economic research firm Rhodium Group. In total, Trump has threatened tariffs on up to 550 billion dollars of Chinese products if Beijing refuses to back down. But it is expected to quickly retaliate with a similar amount of tariffs on American goods, including soybeans, electric cars and whiskey.

The U.S. will levy a 25-percent tariff on more than 800 Chinese product categories worth around $34 billion and has warned of more to come if a trade war escalates.

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The stakes go beyond the economy.

The Labor Department said that USA employers added 213,000 jobs in June.

One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organization. Chinese companies have started turning away from USA soybean suppliers and looking to other sources for agricultural products.

"China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade and the multilateral system", Gao added.

However, after the elections in November it was possible that the economic costs of Trump's approach would be clearer and prompt a rethink, Leering said.

Whatever the reasons, China has been gaining traction.

"I don't see this ending well", she said. It is now the world's largest exporter of high-tech products.

US and European shares were boosted by reassuring economic data from Germany, and as automakers' shares .sxap jumped, with German Chancellor Angela Merkel saying she would back lowering European Union tariffs on USA auto imports after Washington offered to scrap threatened tariffs on European cars.

"They just stole it, and they are using it against us", he said.

While not on the summit's official agenda, European leaders will voice their trade concerns to Trump, diplomats said.

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