Trump ups pressure on China; demands 25% tariffs instead of 10%

China Warns of Retaliation if US Takes More Trade Steps

China Warns of Retaliation if US Takes More Trade Steps

"The U.S. has no regard for the world. playing both soft and hard ball with China will not have any effect, and only serve to disappoint the countries and territories opposed to a trade war", China's Ministry of Commerce said in a statement, adding it still hopes to turn the situation around.

Lighthizer said China's decision caused "further harm to United States workers, farmers and businesses". We and the U.S. rate market expect the Fed to slow the pace of rate hikes in 2019 as the United States economy is likely to slow as the boost from late cycle fiscal stimulus fades. United States economic growth reached its fastest pace for four years during the second quarter, while growth in the Eurozone and elsewhere has remained tepid in the wake of a first quarter slowdown.

A coalition of retailers, manufacturers, technology companies and agribusinesses last week submitted comments to the USTR on the proposed tariffs on $16bn of Chinese imports. When Countries like China and Germany implement policies of wage suppression, they not only make their domestic producers more competitive relative to the United States, they also create excess savings that must be invested overseas.

China has adopted a twin-track strategy to the US's threats.

General Electric estimated the new tariffs on its imports from China could raise its costs by $US300 million to $US400 million overall, before steps to lessen the impact while General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV have lowered their full-year profit forecasts.

But if the White House thinks it is escalating from a position of strength, it probably also fears strength may not last forever and could diminish the longer the conflict lasts. South Korea's exports showed slower-than-expected growth.

The proposal would require a more robust justification from the Department of Defense for "Section 232" tariffs such as those imposed on steel and aluminum imports and those now under consideration for autos. Consumer price inflation is also rising and starting to erode the real value of wage rises. Previously, the administration was considering just a 10% tariff on these goods.

Trump said last month that he's willing to impose tariffs on every good imported from China, which totaled more than $500 billion past year. The communique, which followed a meeting of the country's most senior leaders led by President Xi Jinping, said the campaign to reduce leverage will continue at a measured pace while improving economic policies to make them more forward-looking, flexible and effective in the second half.

- China yet to retaliate but Dollars remains bid, risk assets lower.

China's top diplomat on Thursday encouraged the Trump administration to "calm down" amid escalating tariff threats, saying increased rhetoric will not lead to results.

While a poor PMI for one month doesn't necessarily signal a new trend, it does highlight the risk that the trade dispute is starting to hit economic growth.

Lighthizer claimed that Washington has joined forces with like-minded partners around the world "to address unfair trade practices such as forced technology transfer and intellectual property theft, and we remain ready to engage with China in negotiations that could resolve these and other problems detailed in our Section 301 report".

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