Trump claims China tariffs help, not Harm US, talks

Trump's Trade War With China Could Cost the Average Family Up to $2,300 a Year, Report Estimates

Donald Trump: No collapse in China trade talks, tariff war 'a little squabble'

Let's see what markets have to say about that.

President Donald Trump's trade war with China could cost the average American family of four up to $2,300 a year, according to a report on the effect of tariffs on the USA economy and workers.

Granted, Mexico could increase its sales of electronic goods to the US market, and Argentina could boost its exports of soybeans to China as a result of the escalating U.S. In comments to the media, ministry spokesman Gao Feng said that China's three major concerns need to be addressed before any deal can be reached, adding that the unilateral escalation of tensions in Washington recently had "seriously hurt" talks.

World stocks held near two-month lows on Tuesday as slightly more optimistic comments from USA and Chinese officials on trade brought some comfort, a day after equities suffered their worst selloff so far this year. That might change, however, if markets keep spiraling or if it looks like the economy is starting to falter. He also advised United States companies and consumers complaining about them having to bear the costs of Trump's tariff on imports from China to "buy from a non-Tariffed country instead of China".

"China buys MUCH less from us than we buy from them, by nearly 500 Billion Dollars, so we are in a fantastic position", Trump wrote. The average US tariff on Chinese imports will now be 18%, up from 3% in 2017, according to the Peterson Institute for International Economics. The Trade Partnership Worldwide study found that the US faces a net loss of more than 2.2 million jobs if all tariffs continue and cause a sales decline.

It's understandable. Investors don't know how long this belligerence will last. When that went ahead Friday, Beijing retaliated by raising duties on $60 billion of American goods.

The President's comments will likely feed concerns in other countries over Mr Trump's willingness to break longstanding norms of worldwide economic diplomacy.

Also, let's not forget that our fight with China isn't the only trade war Trump is waging. Will anything happen with Europe and Japan? Even if chief trade negotiator Liu He, China's vice premier and Xi's principal economic adviser, did agree to that, Xi most certainly could not. "Some countries would be more flooded than others, but we would all be under water". The Chinese government is unlikely to cave on issues of sovereignty.

Rural Americans were among the most enthusiastic supporters of Trump in the 2016 election, but the worsening impact of the trade war on agricultural exports is sparking criticism from farm groups.

It's time for another route. It's part of why we should get our minds around the distinct possibility that this trade war will go on a long time. But tariffs on top of other tariffs isn't the answer.

Benchmarks in London, Shanghai and Tokyo advanced as investors tried to figure out the costs of US and Chinese tariff hikes on hundreds of billions of dollars of each other's goods. Already, trade tensions have caused a sharp contraction in world exports, as shown in Figure 2.

Former Goldman Sachs chief executive officer Lloyd Blankfein took to Twitter on Tuesday evening to opine on the effectiveness of tariffs, saying they "might be an effective negotiating tool", Still, four-fifths of economists polled by Bloomberg see a further escalation of tariffs increasing the possibility that the USA economy could slip into recession by the end of next year. The authors demonstrate that "China does a reasonably good job of complying with WTO complaints brought against it".

Still, Trump is right about one thing.

It's much easier to question the wisdom of launching trade wars with allies such as Canada and the European Union. Now to counter-attack that move of Trump, China has also chose to levy taxes on the USA made goods, but that's not going to save its sinking economy.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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