Negotiated settlement with China over trade war unlikely

Forex Today: US-China trade war begins, all eyes on China’s retaliation, US NFP

The United States imposed $34 billion in tariffs on Chinese products Friday, and Beijing hit back with its own fiscal punishment and slammed the Trump administration for igniting "the biggest trade war in economic history".

He also acknowledged the multi-hundred billion dollar US trade deficit with China.

China's commerce ministry said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans and lobsters also faced 25 per cent tariffs.

The total value of the U.S. tariffs on China amounts to $50bn, though they will come into effect in two tranches, with the first round covering 818 products worth about $34bn having come into force on Friday. And American suppliers of soybeans, pork and whiskey could lose their competitive edge in China.

Why Soybeans Are at the Heart of the U.S.

But the conflict could soon escalate.

Hours before Washington's deadline for the tariffs to take effect, President Trump upped the ante on its largest trading partner, warning that the U.S. may ultimately target more than $500 billion worth of Chinese goods - that's roughly the total of United States imports from China previous year. Beijing is pushing for its China Made 2025 project, the strategy for which involves stealing as much intellectual property as possible, including in telecom and defense industries. Some employers will probably put hiring on hold until the picture becomes clearer.

Commerce Secretary Wilbur Ross this week criticized warnings that the tariffs could stifle global economic growth as "premature and probably quite inaccurate". "The direct effects will be amplified as business confidence drops and investment decisions are delayed".

He's hoping the market will turn around.

There is ongoing hope that USA tech companies will benefit if President Trump can negotiate a deal to better protect American technology in China, which is keeping the tech-heavy NASDAQ near all-time highs. It's very hard for American companies in the auto sector or in financial services to sell into the China market, because there's a lot of regulatory barriers.

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports. We buy stuff from America, and America is buying stuff from China.

How the newly imposed tariffs will ultimately affect USA soybean markets remains uncertain, as exporters scramble to find new ways to funnel their product to China.

Acadiana soybean farmers are bracing for the worst case scenario after China imposes tariffs on American products. "It's definitely a wait and see sort of thing", one seller said. "These tariffs could mean the difference between a profit and a loss for an entire year's worth of work out in the field, and that's only in the near term".

And China's foreign ministry said retaliatory tariffs of equal size and scope had taken effect "immediately".

German Chancellor Angela Merkel, seeking to avoid a trade war, has expressed support for eliminating the EU's auto tariffs. But the risks are now priced into the market, and the Dow actually rose almost 100 points Friday to 24,456.48.

The price of soybeans has plunged 17 percent in the past month on tariff fears.

Farmer John Duffy loads soybeans from his grain bin onto a truck before taking them to a grain elevator on June 13, 2018 in Dwight, Illinois.

Wall Street is well conditioned to ignore the often hyperbolic words of US President Donald Trump, and on Friday investors shrugged off comments that his administration is ready to massively escalate a tariff battle that began in earnest on Friday.

Substantial they may be, but the average USA consumer will likely not see these impacts directly for a little while.

If you like Chick-fil-A sandwiches, for instance, you may feel the effects.

The Asian giant is already expected to cancel American soybean imports due to the 25% tariff on the legume and, according to Bloomberg, has already purchased 19 cargoes from Brazil. Taxes that the consumer will have to pay. But many consumer industry groups say American consumers are likely to bear the brunt of the fight.

He said, for now, "he's called the bluff of other countries that have basically been abusing" USA companies and workers. "So we have 50 plus 200 plus nearly 300", Trump said, per reports from CNBC and Reuters. Trump has threatened to hit back with vehicle tariffs of 20%, which would be highly damaging for the German auto industry.

Benchmark 10-year notes last rose 4/32 in price to yield 2.8254 percent, from 2.84 percent late on Thursday.

In this context, the trade face-off smacks of a struggle between the G2 countries for economic hegemony over the global market.

Prosecutors said AMSC lost 700 jobs and more than US$1 billion in shareholder equity after Sinovel stole technology, including software, used in producing and operating wind turbines. "No one wins in a trade war".

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