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Wednesday , November 21 2018

Trade war with US will only bring disaster to global economy: China – Trump’s tariffs jeopardise jobs and prosperity: Germany

BEIJING, March 11, (RTRS): Any trade war with the United States will only bring disaster to the world economy, Chinese Commerce Minister Zhong Shan said on Sunday, as Beijing stepped up its criticism on proposed metals tariffs by Washington amid fears it could shatter global growth.

After pressure from allies, the United States has opened the way for more exemptions from tariffs of 25 percent on steel imports and 10 percent on aluminium that US President Donald Trump set last week.

On Saturday, the European Union and Japan urged the United States to grant them exemptions from metal import tariffs, with Tokyo calling for “calm-headed behaviour.”

But the target of Trump’s ire is China, whose capacity expansions have helped add to global surpluses of steel. China has repeatedly vowed to defend its “legitimate rights and interests” if targeted by US trade actions.

Zhong, speaking on the sidelines of China’s annual session of parliament, said China does not want a trade war and will not initiate one.

Disaster

“There are no winners in a trade war,” Zhong said. “It will only bring disaster to China and the United States and the world.”

China can handle any challenges and will resolutely protect its interests, but the two countries will continue to talk, he said.

“Nobody wants to fight a trade war, and everyone knows fighting one harms others and does not benefit oneself.”

Trump’s announcement on tariffs underlined concerns about rising US protectionism, which has sparked bouts of turmoil in global financial markets over the past year as investors feared a damaging trade spat will shatter a synchronized uptick in world growth.

China’s metals industry issued the country’s most explicit threat yet in the row, urging on Friday for the government to retaliate by targeting US coal — a sector that is central to Trump’s political base and his election pledge to restore American industries and blue-collar jobs.

The US is the world’s biggest importer of steel, purchasing 35 million tonnes of raw material in 2017. Of those imports, South Korea, Japan, China and India accounted for 6.6 million tonnes.

Trade tensions between China and United States have risen since Trump took office. China accounts for only a small fraction of US steel imports, but its massive industrial expansion has helped create a global glut of steel that has driven down prices.

The dispute has fuelled concerns that soybeans, the United States’ most valuable export to the world’s second largest economy, might be caught up in the trade actions after Beijing launched a probe into imports of US sorghum, a grain used in animal feed and liquor.

Zhong said US official trade deficit figures had been over-estimated by about 20 percent, and in any case would be a lot lower if the United States relaxed export restrictions on some high-tech goods.

He also reiterated a previous pledge that China would lower import tariffs on consumer goods including automobiles, as part of an effort to boost domestic consumption.

Tarriffs

Trump believes the tariffs will safeguard American jobs, though many economists say the impact of price increases for users of steel and aluminium, such as the auto and oil industries, will destroy more jobs than curbs on imports create.

Nonetheless, there is growing bipartisan consensus in Washington, and support within some segments of the US business community, for the US government to counter what are seen as Beijing’s predatory industrial policies and market restrictions on foreign firms.

Trump’s administration has said the United States mistakenly supported China’s membership in the World Trade Organization in 2001 on terms that have failed to force Beijing to open its economy.

Diplomatic and US business sources say the United States has frozen a formal mechanism for talks on commercial disputes with China because it is not satisfied Beijing has met its promises to ease market restrictions.

Trump’s tariffs on steel and aluminium imports will cost jobs and growth, German Economy Minister Brigitte Zypries told Reuters on Sunday, adding that Europe and other free traders should not let themselves be divided.

Trump set import tariffs on Thursday of 25 percent on steel and 10 percent on aluminium, to come into force in 15 days, stoking fears of a tit-for-tat trade war that could drive up prices and depress growth around the globe.

The European Union responded by saying it would ask the World Trade Organization to impose its own measures, adding that it was still hopeful the 28-member bloc would be made exempt.

Europe is the biggest exporter of steel to the United States, accounting for nearly 5 million tonnes out of total US imports of about 35 million tonnes a year.

“Trump’s policies are putting the order of a free global economy at risk,” Zypries told Reuters in an emailed statement.

“He does not want to understand its architecture, which is based on a rule-based system of open markets. Anyone, who is questioning this, is jeopardising prosperity, growth and employment,” Zypries said.

US steel- and aluminum-consuming industries have also criticized the tariffs as damaging them with higher costs.

Germany and its allies must now safeguard the free trade order and avoid being divided by Trump’s offer to exempt some allies such as Mexico, Canada and Australia from the proposed tariffs, Zypries said.

“It is important for Europe to show collectively that there can be countermeasures and that there won’t be cracks in the alliance of free traders,” the minister said.

The European Union and Japan urged the United States on Saturday to grant them exemptions from the metal import tariffs, with Tokyo calling for “calm-headed behaviour” in a dispute that threatens to spiral into a trade war.

Trump has threatened to hit Europe’s car makers with import tariffs if the EU retaliated in response to the metal measures.

Such a move would be particularly hurtful for Germany, Europe’s largest economy, since the US is one of the biggest export destinations for German auto manufacturers and cars and vehicle parts are also its biggest source of export income.

European Competition Commissioner Margrethe Vestager told German newspaper Bild am Sonntag that Brussels would continue to seek dialogue with Washington and to be exempt from the tariffs.

“But if the new tariffs really hit Europe, we will take countermeasures,” Vestager said.

Such measures could include European Union tariffs on US oranges, tobacco and bourbon. Harley-Davidson motorcycles have also been mentioned, targeting Republican US House of Representatives Speaker Paul Ryan’s home state of Wisconsin.

“We have been building a global trading system for decades. European prosperity and millions of jobs depend on it — and Europe will not to stand idly by if someone puts the order of free world trade at risk,” Vestager added.

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