Who is losing out from Trump’s tariffs?

The US-China trade dispute is starting to have consequences.

US tariffs on foreign steel and aluminium went into effect last month. China’s retaliatory duties on more than 100 US imports, including pork, fruit and wine, kicked in soon after.

Further tariffs on $50bn worth of the each country’s products are in the offing, as the Trump administration presses China on state subsidies and practices it says encourage intellectual property theft. The White House has threatened even more.

Economists expect the duelling taxes to have a relatively limited impact on the overall US economy. But they say the measures will touch most parts of the country and lead to higher prices for everything from televisions to vitamins.

For certain industries like agriculture, aerospace and manufacturing, the effects could be severe.

So how are US companies handling a looming trade war?

Roadtec: ‘Unanswered questions’

For some firms, the measures are welcome. Companies such as US Steel have announced plans to expand their operations, bringing on hundreds of workers.

Their customers – many of them manufacturers located in the Midwest – are worried, however.

They say US tariffs have already increased demand for domestic steel – which accounts for the majority of the metal’s sales in America – driving up prices for firms reliant on steel-based parts.

The proposed tariffs, which include taxes on hundreds of Chinese-made parts and equipment, promise more pain.

At Roadtec, a growing 600-person Tennessee company that makes asphalt paving machines, suppliers are already asking 40% more, says the firm’s marketing director, Eric Baker.

He says the firm is still trying to figure out how to best address the higher costs.
“There’s a lot of uncertainty right now,” he says. “I think the biggest question is how long this is.”

Seneca Foods Corp: ‘Absorb the cost’

Hundreds of firms have asked the Commerce Department for exemptions from the US steel and aluminium tariffs, including Wisconsin-based Seneca Foods Corp.

The firm, which makes its own cans to support a large fruit and vegetable processing business, started importing coils of tin-plated steel just a few years ago, after domestic supply became uncertain.

Leon Lindsay, Seneca’s vice president for sourcing, says he is not sure where he will buy coils now, given the uncertainty about how the US tariffs will affect other markets such as Europe.

In the meantime, a Chinese shipment from an order of 11,000 metric tons, placed last summer, is due in port in the next few weeks and faces the new 25% mark-up.

Mr Lindsay said he is not optimistic a Commerce Department reprieve will come in time, nor can the firm, which is in the competitive food industry, pass on the higher cost of steel to its customers.

“The stuff we’re asking for exclusion [for] is on the water. It can’t go back, so we’re the ones that will probably have to absorb the cost, which is significant,” he said.

Farmers are also bracing for a hit.

Will Hsu, whose father started a ginseng farm in Wisconsin more than 40 years ago, was in China last week, meeting with clients and sales staff.

“This comes up with every customer that we meet with. This comes up with our staff,” he said. “They’re worried about how they’re going to pass on that price increase.”

Wisconsin, the source of more than 90% of the United States’ cultivated ginseng, can’t afford to lose access to the Chinese market – which has been a key buyer of American ginseng since the 1700s and is the destination for more than three quarters of the state’s crop.

Industry members said American ginseng has a reputation for quality, commanding a premium price that provides some room to negotiate.
Mr Hsu says his farm, which employs about 400 people in the US and China, also has enough US clients to handle a temporary tariff. But levied long term, the tax could force him to scale back.

Hutchinson Farms: ‘Cutting off our nose’

Farmers are also worried about foreign competition.

About a third of America’s soybean crop heads to China each year – some $14bn in exports – but Argentina and Brazil are also big exporters.

Drought has hurt Argentina’s crop, but farmers in Brazil expect the US-China dispute to increase demand for their product, says Victor Carvalho of Informa, a business intelligence firm. They are also watching to see if US prices will fall enough to make it worth importing US soy to crush and resell, he says.

Will Hutchinson, a fourth generation farmer from Tennessee, has been monitoring developments on the news and is hoping the situation will de-escalate.
“Trade is vitally important to both countries,” he says of China and the US. “We don’t need to be cutting off our nose to spite our face.”

Greenland America: ‘There will be an overhang in the market’

About half of US scrap aluminium exports went to China last year, but US firms are already starting to turn to other markets.

The shift is a response in part to tougher environmental rules China had already imposed on waste imports. China’s new tax on aluminium scrap compounded the problem.
Randy Goodman is executive vice president at Georgia-based Greenland America, a brokerage that buys and sells scrap metals in countries around the world.

So far, he says less than 10% of his firm’s business to China has been affected, but he’s worried about the future.

“The issue is that these other countries or even the domestic consumers … can’t pick up all the slack so there will be excess material,” he says. “There will be an overhang in the market that will eventually affect the pricing.”

‘It’ll be very good’

President Trump has said he is confident that confronting China will lead to a stronger US economy, and tried to reassure those who are worried.

“It’ll be very good when we get it all finished,” he said this week.
The people whose livelihoods are caught up in the dispute are hoping the president is right.


 

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Author BBC News

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China hammers U.S. goods with tariffs as ‘sparks’ of trade war fly

BEIJING – China has increased tariffs by up to 25 percent on 128 U.S. products including frozen pork, wine and certain fruits and nuts, escalating a spat between the world’s biggest economies in response to U.S. duties on imports of aluminium and steel.

The tariffs, to take effect on Monday, were announced late on Sunday by China’s finance ministry and matched a list of potential tariffs on up to $3 billion (£2.1 billion) in U.S. goods published by China on March 23

Soon after the announcement, an editorial in a widely read Chinese tabloid warned that if the U.S. had thought China would not retaliate or would only take symbolic counter-measures, it can now “say goodbye to that delusion.”

“Even though China and the U.S. have not publicly said they are in a trade war, the sparks of such a war have already started to fly,” the editorial said.

China’s Ministry of Commerce said it was suspending its obligations to the World Trade Organization (WTO) to reduce tariffs on 120 U.S. goods, including fruit and ethanol. The tariffs on those products will be raised by an extra 15 percent.

Eight other products, including pork and scrap aluminium, will now be subject to additional tariffs of 25 percent, it said, with the measures effective from April 2.

“China’s suspension of its tariff concessions is a legitimate action adopted under WTO rules to safeguard China’s interests,” the Chinese finance ministry said.

The retaliatory tariffs came amid escalating trade tensions between Beijing and Washington, which have rocked global financial markets in the past week as investors feared a full-blown trade spat between two countries will be damaging for world growth.

U.S. President Donald Trump is separately preparing to impose tariffs of more than $50 billion on Chinese goods intended to punish Beijing over U.S. accusations that China systematically misappropriated American intellectual property – allegations Beijing denies.

China has repeatedly promised to open its economy further, but many foreign companies continue to complain of unfair treatment. China warned the United States on Thursday not to open a Pandora’s Box and spark a flurry of protectionist practices across the globe.

“There are some people in the West who think that China looks tough for the sake of a domestic audience, and would easily make concessions in the end,” the editorial said.

“But they are wrong.”

The Global Times is run by the ruling Communist Party’s official People’s Daily, although its stance does not necessarily reflect Chinese government policy.

In a statement published on Monday morning, the Chinese commerce ministry said the United States had “seriously violated” the principles of non-discrimination enshrined in World Trade Organization rules, and had also damaged China’s interests.

“China’s suspension of some of its obligations to the United States is its legitimate right as a member of the World Trade Organization,” it said, adding that differences between the world’s two largest economies should be resolved through dialogue and negotiation.


 

Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author’s Ben Blanchard, Tony Munroe

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