A few days ago, the United States launched the first shot of the trade war against China. US President Trump signed a memorandum announcing that it will take measures to impose tariffs on Chinese products, restrict Chinese investment, and bring relevant issues to the WTO dispute settlement mechanism.
The White House website and the US Trade Representative Office did not disclose the value of the goods subject to tariffs, or increase the amount of tariffs. However, foreign power quoted relevant government officials as saying that the United States would impose tariffs on Chinese imports worth $60 billion. This is a package of measures issued by the United States based on the results of its 301 investigation against China launched last year. The investigation has raised many accusations against China's intellectual property protection and technology transfer.
So, which Chinese imports will become the target of taxation?
Goldman Sachs believes that power tools and electrical products top the list. This is because the US trade deficit with China is significant on these products. China imposes higher tariffs on such products imported from the United States, and imports from these products are relatively high. Goldman Sachs said that for the same reason, consumer electronics such as sporting goods, toys, jewelry and televisions are also ranked high. China's imports of air navigation and navigation equipment, railway equipment, ships, furniture, etc., are ranked lower because they account for a small proportion of total domestic sales.
In considering the above rankings, Goldman Sachs first excluded the US trade with bilateral trade surplus, while the remaining commodities were ranked according to the weighted average of five criteria: 1. US-China bilateral trade balance; 2. US-China tariff gap; 3. Finally The share of imports (usually consumption or investment), rather than intermediate inputs to other industries; 4. The proportion of imports from China to the total domestic intermediate and final demand; 5. Whether the category is “Made in China 2025†The focus of the report.
China began to fight back!
China began a counterattack and gave the first step of counter-measures. On March 23, 2018, the Ministry of Commerce issued a list of suspension concessions for the US import of steel and aluminum products 232 measures and solicited public comments. It is proposed to impose tariffs on some products imported from the United States to balance the import of steel and Aluminum products are subject to tariffs and losses caused by Chinese interests.
The list tentatively includes 7 categories and 128 tax items. According to 2017 statistics, it involves US exports of about US$3 billion to China. The first part consists of 120 taxes, involving US$977 million in exports to China, including fresh fruits, dried fruits and nut products, wine, modified ethanol, American ginseng, seamless steel pipes, etc., and is subject to a 15% tariff. The second part consists of 8 taxes, involving US$1.992 billion in exports to China, including pork and products, and recycling of aluminum. It is proposed to impose a 25% tariff. If it is considered that the Office of the US Trade Representative will draft a list of China's imported goods that will be subject to tariffs within 15 days, it is expected that China will also propose further counter-production lists accordingly. The list refers to the fact that the goods will be based on the list proposed by the US, and may maintain a similar level of magnitude and amount.
Trade protectionism poses a threat to global growth
In the article "Global Times Review: Resisting US Soybeans is Easy to Do", the Chinese commented that the Chinese do not want to fight trade. This is a country that is willing to be kind and good-natured. But the Trump administration’s arrogance is telling the truth that some Chinese are angry. They need a lesson, and more and more Chinese people are starting to think like this. The Chinese have a saying that "there is no coffin and no tears." If the Trump administration wants to play a trade war to show how thick the legs of Washington are, then it will be a good time to fight, who is afraid of who. Chinese patriotism and collectivism will likely have a role at that time, and the slogan of boycotting American cars and other big roads may ring the Chinese Internet and get a response. It is not only the Chinese government that counters the US trade war, but many Chinese people are willing to turn it into a "people's war." Do not believe? Please try it.
Since taking office, Trump has been reducing the US trade deficit as an important task. But we really don't understand where the US self-confidence in China's trade war is coming from.
Dr. Adam Posen, Dean of the top economist Peterson Institute, commented on President Trump’s trade protectionist initiative: “This is simply stupid, it’s incompetent, corrupt or misleading!†Professor Harvard University Economics Free Frankel believes that the United States has a huge and growing trade deficit because of huge and growing deficits in budget and national savings. “Taxation is not a good way to solve this problem.â€
Cao Dewang, chairman of Fuyao Glass Industry Group, said, "The United States wants to increase tariffs, 20% is not enough 40%, 50% I also support. Because I don't sell money, I won't sell it to you. My bottom line is here. I believe that as long as the United States There is demand, and tax increase is not the solution to the problem."
The Smatter-Hawley Tariff Act attempted to protect the US market with high tariffs and increased the tariffs on more than 20,000 imported products by an average of 50%. As a result, a trade war was triggered, which led to the longer duration of the Great Depression. This sharp increase in tariffs is aggravating the already unsound global economic recovery. The global economic outlook may be even more uncertain, and the globalization process may encounter more twists and turns.
In an article, Brookings scholar Warwick J. McKibbin predicts that if tariffs increase by 10%, it will trigger a small global trade war, and most countries' GDP will be reduced by 1%-4.5%. Among them, the United States will lose 1.3%, China will fall 4.3%; if the tariff increases by 40%, it will trigger a global depression.
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