Copper Prices Fall as U.S. and China Step Up Trade Tussle

05 April, 2018, 01:58 | Author: Judith Dennis
  • Imported nuts from the United States are displayed for sale at a supermarket in Beijing on Monday. China raised import duties on U.S. pork fruit and other products Monday in an escalating tariff dispute with President Trump that companies worry might dep

The country's tax agency gave no date for the 25 percent increase to take effect and said it will depend on what President Donald Trump does about USA plans to raise duties on a similar amount of Chinese goods. China has also placed tariffs on other agriculture commodities including fruits, vegetables, nuts and wine.

"U.S. companies at this point would like to see robust communication between the United States government and the Chinese government and serious negotiation on both sides, hopefully to avoid a trade war", said the chairman of the American Chamber of Commerce in China, William Zarit.

Foreign companies are increasingly alarmed by initiatives such as Beijing's long-range industry development plan, dubbed "Made in China 2025", which calls for creating global leaders in electric cars, robots and other fields. That has provoked anger in China, while there are doubts that the tariffs will succeed in changing Beijing's behaviour.

A man walks by an electronic board displaying stock trading index at a brokerage house in Beijing, Tuesday, April 3, 2018. Those tariffs covered less than 1 percent of Japanese imports at the time.

Industrial stocks appeared to be the hardest hit.

Porter said that FireEye, which monitors more than two-dozen groups linked to the Chinese government, has observed espionage activity continue against USA firms, including those producing sensitive military technology like satellite navigation systems and semiconductors. Those tariffs, on 106 types of American goods, take direct aim at the farm belt and manufacturing hubs, both big bases for President Trump. The S&P 500 has fallen more than 4 percent since March 1, the day President Donald Trump said he meant to place tariffs on steel and aluminum imports.

Since the agreement, security experts have observed a significant decline in Chinese cyber-enabled intellectual property theft from US companies, and the pact has been largely cheered as a diplomatic accomplishment. The administration has been increasingly bullish in calling out nations for bad behavior in cyberspace, blaming Pyongyang and later Moscow for separate global malware attacks that ravaged companies worldwide previous year.

An editorial in the hawkish Global Times said tariffs on U.S. soybeans and corn would hurt United States farmers and increase political pressure on Trump, and encouraged higher tariffs on USA vehicle makers such as General Motors selling into the world's largest auto market.

The trade actions will not be carried out immediately, so there may be room for manoeuvre. While industrial and chemical companies are falling sharply, consumer goods makers and some retailers are up. The state-owned company has won orders to supply subway trains in Philadelphia, Los Angeles, Boston and Chicago.

He also dismissed the slumps in USA stock futures as "being out of proportion". China is a crucial market for Boeing.

"These are some of the companies most exposed to potential tariffs".

"It is no coincidence that the Chinese have not yet set the date when these new tariffs will become effective", said Raoul Leering, head of global trade analysis at ING. The 25 percent tariff would be placed on raw ingredients for drugs such as insulin used by diabetics, the anti-allergic-reaction drug epinephrine, as well as vaccines, blood products and antidepressants, according to the list.

China's major suppliers of raw drug ingredients include Zhejiang Hisun Pharmaceutical Co, CSPC Pharmaceutical Group Ltd, and Zhejiang Hisoar Pharmaceutical Co.

"It is unacceptable to ask China alone to cut the deficit by $100 billion as the trade gap is determined by market forces and the overall economic policies and structure of the U.S.".

Shares of Caterpillar, also a big exporter to China, fell 2.4 per cent.

A Beijing-based spokesman for Boeing, the largest single United States exporter to China, declined to comment.

Many consumer companies also shrugged off the tariffs.

In September 2015, then-President Obama and Chinese President Xi Jinping reached a watershed agreement to stop supporting cyber-enabled intellectual property theft against businesses in their respective borders.

Most investors agree that tariffs are bad for business and the economy.

Asian stocks fell for a second day Tuesday amid jitters about U.S. China is the world's largest soybean importer, and buys about 60 per cent of the U.S. soy crop, making it, at US$14 billion (NZ$19.2 billion), the most valuable U.S. agricultural export to China.

The highest profile corporate casualty was South Korean conglomerate Lotte Group, which saw its plans for mega shopping complexes indefinitely suspended and almost all of its Lotte Mart stores in China shut for much of the year over alleged fire safety issues.

"If someone wants a trade war, we will fight to the end". "Unilateral tariffs may do more harm than good and do little to address the problems".

"What China needs to do now is to make the United States pay the same price" so Americans "understand anew the Chinese-U.S. strength relationship", the newspaper said.

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