Stupid is As Stupid Does: Trump Hits China With $200 Billion More Tariffs

The global trade war escalated moments ago when Trump fired back with a threat of $200 billion more tariffs.

In response to US tariffs, China put $50 million of its own tariffs on US good. Trump did not like that and responded with a threat of $200 billion more tariffs.

CNBC reports Trump Fires Back at Beijing with Threat of New Tariffs on $200 Billion in Chinese Goods.

President Donald Trump has requested the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent.

The new duties will go into effect "if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced," the president said in a statement provided by the White House late on Monday.

The move comes after the U.S. on Friday announced that it would impose a 25 percent tariff on up to $50 billion of Chinese products. Tariffs on an initial list of goods worth some $34 billion will kick in on July 6.

Monday's proposed measure is in response to Beijing's decision to raise tariffs on U.S. exports, the White House statement said.

Stupid is As Stupid Does

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Not to worry. Trade wars are very winnable.

China's prices will rise. US prices will rise.

We call this "winning"

Mike "Mish" Shedlock

Comments (25)
No. 1-25
tz1
tz1

Why isn't isn't it "Stupid" when China (or Mexico, India, the EU, etc.) imposes tariffs on the US, but only when the US imposes tariffs?

Roger_Ramjet
Roger_Ramjet

The Fed has been working so hard for years trying to create 2% inflation. This may do the trick.

2banana
2banana

China has a $300 billion/year trade surplus with America. Nearly every country in the world has a trade surplus with America. No wonder no one wants to change the status quo. We have been played the fools because...why again? But America is only at fault for not wanting to be the trade fool anymore.

Kinuachdrach
Kinuachdrach

"Stupid" is China -- whose massive trade surplus with the US shows they have been winning this long-running trade war that prior administrations pretended was not happening. Huge trade imbalances are unsustainable. Recognizing that, the Chinese should start to reduce their tariffs towards the much lower general level of the tariffs the US imposes on China.

But the Chinese are counting on the their allies inside the US undermining the US Administration and forcing the US to back down and accept damagingly-unfair trade terms. That is how it has always worked in the past. Let's hope the Chinese are making the mistake of fighting the last war.

Tengen
Tengen

So the tit for tat war continues. China needs to figure out how to make this painful enough for US business that they start to retaliate politically and/or threaten job cuts. The Chinese should be able to endure for a while by subsidizing businesses harmed by tariffs, funneling money to them that would normally be earmarked for US treasuries.

In the meantime, consumers will get to pay more for goods. Not sure why Trump gets fanfare for these tariffs. If supporters really cared about average Americans, they'd be up in arms against the Fed and central bankers, not the Chinese.

shamrock
shamrock

25% of $50B, and 10% of $200B, that adds up to $32.5B in new taxes to the federal government. Or, as they like to say, $325B over 10 years. Nice.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

LOL - it will not add up to anything positive. There will be a loss of US jobs as a result.

channelstuffing
channelstuffing

It's not a trade war,it's a boycott,trump wants chicoms gone,take there cheap shoddy junk and hit the bricks,he know Amerika has nothin really worth trading,dept,war and garbage has no real intrinsic value,trump knows china's economy depends entirely on amerikans cashing the checks they get from the gov't ,the handouts they get from the gov't,the paychecks they get from the gov't,the entitlements they get from the gov't,the subsidies they get from the gov't,goin to walmart and sending all of it to the chicoms,without those checks,china collapses (really quick)

RonJ
RonJ

How many American jobs have been lost by the closure of 60,000 factories? How much intellectual American property has China stolen,, to our detriment? How much damage has China's violation of WTO rules caused?

Trump didn't get Kim Jong Un to the table by being nice. He turned the screws. 200 billion more in tariffs is another turn of the screw.

Happy Bliss
Happy Bliss

He's doing something! Finally someone is doing something. Life is not only material. So we suffer a bit, yet we get some principles back.

MarkBC
MarkBC

Has anyone considered that the trade war might be a smoke screen, just like Trump's morning tweets soak up the entire 24-hour news cycle, allowing him to do whatever else he wants that day without press scrutiny. I have no idea what he is trying to draw attention away from, but, for example, is it possible that Trump's companies/sectors are avoiding tariffs and/or benefiting from the tariffs that are being imposed? Has anyone looked for any other patterns in the sectors that are being affected or not affected?

AWC
AWC

Tariffs are taxes. Since when are taxes productive?

Realist
Realist

Trump is looking for political gains by picking fights with anyone and everyone. This makes it look like he is standing up for US citizens. If he starts a trade war, his support will go up further as he rallies more and more citizens against all those evil countries who impose tariffs in response to his tariffs. It’s worth noting that the US actually has higher tariffs than virtually every other developed country that they trade with. But facts like that don’t matter to Trump. And most of his supporters will believe him. All you have to do is read some of the earlier posts in this thread. You can see that Trump has convinced many people that the US is innocent and everyone else is evil. Meanwhile, the US has record low unemployment and has more jobs sitting empty than the number of unemployed workers. This tariff war has nothing to do with jobs. It’s simply the politics of hate. And Trump isn’t the first to use it.

Kimo
Kimo

A new term... Trade Trap. Trump loves free trade, patience grasshopper, this is a process. It was planned at least three years ago, when he announce his candidacy. I'd be careful about betting against him. The Trap https://www.zerohedge.com/news/2018-06-18/china-enters-trade-trap The Statement

CautiousObserver
CautiousObserver

Realist said: “It’s worth noting that the US actually has higher tariffs than virtually every other developed country that they trade with.”

Is there a citation to back that statement up? The Washington Post does not agree. They ran a March 2018 story on US tariffs and trade barriers versus others and reported that the US does not have the lowest trade barriers as Peter Navarro and Trump stated, but it is not bad (Japan, Canada and Australia have lower weighted average trade barriers). They were only able to muster 2 out of 4 Pinocchios for Navarro claiming “The United States has the lowest tariffs in the world.”

Sergei
Sergei

Mish, haven't you advocated here "want a change - vote for Trump"?

Jojo
Jojo

Perhaps oil and gas prices willnow decline in the USA as China and other countries stop buying our oil exports? $4 gas in Calif. sucks.

June 17, 2018 China's tariffs on U.S. oil would disrupt $1 billion monthly business

SINGAPORE (Reuters) - China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month.

In an escalating spat over the United States’ trade deficit with most of its major trading partners, including China, U.S. President Donald Trump said last week he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, starting on July 6.

China said Friday it would retaliate by slapping duties on several American commodities, including oil.

Investors expect the spat to come at the expense of U.S. oil firms, pulling down the share prices of ExxonMobil and Chevron by 1 to 2 percent since Friday, while U.S. crude oil prices fell by around 5 percent.

....

Stuki
Stuki

It is stupid. Period. And furthermore, Stupid is absolutely all it is. There are no exceptions. Because there simply cannot be any.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

"Stupid is absolutely all it is. There are no exceptions. Because there simply cannot be any."

Yes! Precisely!

Stuki
Stuki

Everyone else has a "trade surplus" with America, because every other country has a capital account deficit with America. The former being nothing more than the mirror of the latter.

It has no significance on it's own at all. Just another Newspeakian term. Useful for riling up the illiterates to cheer for Dear Leader, when he announces which country we have currently always been at war with.

Get rid of the capital account surplus, by stopping printing and debt growth, and the trade deficit is gone. Inevitably.

Sechel
Sechel

China clearly exports more to the U.S. than the U.S. to Japan, but this logic driving Trump's trade threats ignores that U.S. companies like Apple, Walmart and General Motors all operate in Japan and are looking to expand. China can make life very difficult for these companies and it is in U.S. interest to see American companies succeed globally even if part of that success means competing in a foreign market.

G.Haris
G.Haris

Hello Mish,

Can't help but wonder if Trump has the wider geopolitical implications with China in mind as he escalates this "trade war". By shrinking their economy, it will curtail their military expansion. This is right out the the Reagan playbook when he squared off against Gorbachev in Reykjavik.

Tocino
Tocino

Where will go the money collected?

In the end it is just a tax and the USA need money to pay their deficit.

LawrenceBird
LawrenceBird

China exports just under 500B of goods to the US. That is slightly less than 20% of their worldwide exports and somewhere between 3 and 5% of their GDP. I really doubt that China will blink as they know the US does not have alternative sourcing for much of those exports. So while Trumps taxes will reduce demand somewhat, it won't bring China's economy to its knees nor will it bring back (net) any US jobs.