Beijing meets Trump’s tariff hardball with pledge to endure

Bloomberg

After a weekend of claims by US President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout.
China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests, according to an editorial in the nationalist Global Times. “Considering the unreasonable US demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a US economic vassal.”
The exchange of barbs between the two sides follows the release in Beijing of a tariff list designed to retaliate against the US threat to impose new duties on $200 billion of Chinese imports. The worsening of the tension comes amid a slowing of China’s economy, declines in the currency and a bear market
in stocks.
Trump told an audience of diehard supporters that playing hardball on trade is “my thing.”
“We have really rebuilt China, and it’s time that we rebuild our own country now,” Trump said during about an hour of free-wheeling remarks at a rally outside Columbus, Ohio.
China’s market declines weaken that nation’s bargaining power in the escalating trade war, he added.
Trump continued his focus on tariffs, tweeting that the duties are working “big time” and that imported goods should be taxed or made in the US. He also suggested duties will allow paying down “large amounts of the $21 trillion in debt that has been accumulated” while reducing taxes for Americans.
“Every country on earth wants to take wealth out of the US, always to our detriment,”
The yuan pared some gains following a rally triggered by a surprise China central bank move to make it more expensive to bet against the currency. China stepped in to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar.
China’s current account returned to a surplus in the second quarter after a surprise deficit in the first three months of the year.
“Policy makers will pay more attention on the changes in current account as it approaches a balance near zero, signaling less room for currency appreciation,” according to Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Bank.
Duties ranging from 5 percent to 25 percent will be levied on 5,207 kinds of imports from America if the US delivers its proposed taxes on another $200 billion of Chinese goods, the Ministry of Finance said in a statement on its website.
Including the new tariffs already in force, China has now identified almost 6,000 items for higher import taxes, including liquid natural gas, soybeans, and other products. That covers more than two-thirds of the value of China’s imports from the US, but it excludes products such as big aeroplanes and some computer chips, which China struggles to produce.
More than 500 goods on the lists aren’t traded at all, and China imported less than a million dollars worth of about another 2,000 items, according to a Bloomberg analysis of 2016 trade flows.