China Cancels U.S. Soybean Purchases as Trade War Takes Hold

Exchange Group offices are seen in the City of London Britain

Is it Smoot-Hawley II, or an economic liberation?

While economists say the consequences of a spat between the world's two largest economies can be contained for now, there are fears that Donald Trump's stance on trade could cause serious damage to the global economy.

President Donald Trump says he has tariffs on hundreds of billions of dollars in more Chinese goods ready in his pocket - if it comes to that - while China says the USA has launched the biggest trade war in history.

As of 12:01 eastern this morning, computers at US customs should have been reconfigured to apply new tariffs on $34 billion worth of Chinese goods, which include printers, cars and industrial parts.

Hours before Washington's deadline for the tariffs to take effect, US President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of US imports from China a year ago.

"It's still hard for me to believe the Trump administration could develop and negotiate an overarching package with China that genuinely sticks", Kennedy said.

The state-run China Daily accused the Trump administration of "behaving like a gang of hoodlums", saying that they would damage the global economy unless other countries stop them.

It is unclear whether the Trump administration appreciates how integrated the global economy has become or have properly thought through the consequences for the United States if Xi Jinping and the European Union leadership refuse to blink and subsequently cave in to the USA demands that they sell less to the U.S. and buy more from it. "There should be no doubting Beijing's resolve", the newspaper said.

A China central bank adviser said the planned United States import tariffs on $50bn worth of Chinese goods - $34bn plus a planned follow-on list worth $16bn - will cut China's economic growth by 0.2 percentage points, the official Xinhua news agency reported on Friday.


That would bring the total of targeted Chinese goods to potentially $550bn - more than the $506bn in goods that China shipped to the USA past year. This figure exceeds all of China's annual goods exports to the U.S.

Trump argues that the deficit with China is a problem that has to get resolved now rather than later.

Numerous farmers interviewed on their properties voted for Trump. Others may not have voted for him but did not vote for Hillary Clinton, opting to write in third-party candidates or leave that part of the ballot blank.

I view these tariffs as a negotiating ploy by President Trump to try to force the Chinese to open up their market better for American companies.

Riggs said farmers are "hopeless optimists" when it comes to the future. They're glad someone is talking about trade. "Tariffs that beget tariffs that beget more tariffs only lead to a trade war that will cost American jobs and economic growth".

That may well be true, but it's about to be true for the rest of American consumers too.

They are imposed to increase the price of foreign goods to make domestic produce cheaper in comparison, with the aim of protecting local firms from global competition. Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China now maintains a 25 percent tariff on cars from the United States.

Farmer John Duffy loads soybeans from his grain bin onto a truck before taking them to a grain elevator on June 13, 2018 in Dwight, Illinois. Beijing is pushing for its China Made 2025 project, the strategy for which involves stealing as much intellectual property as possible, including in telecom and defense industries. "We just think there are alternative choices to make China trade fairly than going into the tariff war".

That strategy can only last so long, though.

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