Renewed U.S.-China trade spat boosts safety demand for yen

President Donald Trump and China's President Xi Jinping arrive for a state dinner in Beijing last year

President Donald Trump and China's President Xi Jinping arrive for a state dinner in Beijing last year Credit Thomas Peter Reuters

On Friday, Trump said he planned to push ahead with tariffs on $50 billion worth of Chinese imports. The first round is to take effect on July 6.

China, claiming the United States had "launched a trade war", retaliated nearly immediately, outlining its own tariffs on U.S. goods worth $50 billion.

"If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200bn of goods". "Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent". But China's imports from the United States previous year totalled $153.9-billion. China protects its companies in many sectors, especially high-tech.

"Just about every major information and communication technology product was exempted", one US industry told Reuters.

So, doesn't the administration have a point?

He said China's recent claims of "openness and globalization" are "a joke".

The US-China trade frictions escalated further over the weekend and we are unfortunately moving away from the "Grand Bargain" scenario towards the "trade war" scenario.

China's heavily regulated economy also gives officials the option of tying up companies with tax, anti-monopoly or other investigations.

United States officials will hold a press conference on the decision to impose further tariffs on China this morning. In 2017, China imported 60 percent of total US soybean exports, representing almost 1 in 3 rows of harvested soybeans, with a value of $14 billion.

That deadline has been extended several times as Canada and Mexico struggle to accommodate far-reaching USA demands for change, such as a sunset clause that would allow one nation to pull out after five years.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Mr. Trump said.

But Oosterveld said he was optimistic that the USA and China would ultimately reach a bilateral deal by the end of the year. It said with retaliatory tariffs imposed by American trading partners added in, the total rises to $181-billion, or 1 per cent of global trade.

Whatever the Trump administration puts on its next list of Chinese goods will be carefully chosen in order to inflict the most pain, Oosterveld suggested.

Pompeo on Monday described USA actions as "economic diplomacy", which, when done right, strengthens national security and global alliances, he added.

And the China trade offensive is only one side of Trump's multi-front battle with all major USA economic partners.

Apple's iPhones are assembled in China from parts manufactured in China, the US, and other countries, a process that could bring the tech giant into the forefront of the Trump administration's escalating trade actions against Beijing as well as China's retaliatory measures.

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