US trade tariffs

As Trump Embraces More Tariffs, US Business Readies Public Fight

More than 60 U.S. industry groups are launching a coalition, Americans for Free Trade, on Wednesday to push Republican lawmakers to press Trump to abandon tariffs and his protectionist policies.

Washington: After months of waging a behind-the-scenes war against President Donald Trump‘s trade tariffs that have escalated far beyond what business groups once imagined, more than 60 US industry groups are launching a coalition on Wednesday to take the fight public.

Emergence of the group, Americans for Free Trade, comes after Trump has warmed to the use of tariffs, implementing billions of dollars worth in an effort to use them as a threat to win concessions or in the belief they will create US jobs.

“A lot of other interest groups thought they wouldn’t go this long or go this deep, but the layering effect (of tariffs) has finally gotten everyone to say: ‘Enough is enough’,” said Nicole Vasilaros, the top lobbyist for the National Marine Manufacturers Association, whose members are weighing laying off workers after seeing costs rise as much as 35%.

Trump has imposed 25% tariffs on $50 billion worth of Chinese goods, mostly industrial machinery and intermediate electronics parts such as semiconductors.

A pending $200 billion list would extend further into consumer goods, and the threat of an additional $267 billion would basically cover every Chinese export to the US. China has threatened retaliation, which could include action against US companies operating there.

Washington has demanded that Beijing better protect American intellectual property, cut its US trade surplus, allow US companies greater access to its markets and roll back its high-technology industrial subsidy programs.

The business coalition includes groups representing some of the nation’s largest companies. Among them, the American Petroleum Institute, which represents the largest refiners like Exxon Mobil Corp and Chevron Corp, and the Retail Industry Leaders Association, which represents companies like Target Corp and Autozone Inc.

“There has been a lot of work that has been going on over the last eight months to try to persuade the president and the administration that tariffs are not going to work. Our view is that it’s not too late,” said Dean Garfield, chief executive of the Information Technology Industry Council, whose members include Microsoft Corp, Google owner Alphabet Inc and Apple Inc.

While Trump threatened tariffs on the campaign trail and ended America’s participation in the Trans Pacific Partnership, a large multinational trade pact, few observers took his threat seriously.

Trump has since demonstrated he is serious on tariffs, ramping up the attacks on China, threatening car import levies and pushing for a more pro-American North American Free Trade Agreement, even at the risk of killing the three-country pact.

Retail Lead

The coalition grew out of weekly meetings featuring industries organised by the National Retail Federation (NRF), whose members include Amazon.com, Macy’s Inc and Walmart Inc.

“This is almost every sector of the American economy involved,” said David French, the top lobbyist for the NRF.

The group will target Republican members of Congress in five states – Ohio, Pennsylvania, Illinois, Indiana and Tennessee. While not engaging in electioneering ahead of November 6 elections where control of Congress is at stake, it will urge constituents to discuss the trade issue with lawmakers. The group plans to expand that effort to a dozen states by the end of the year.

Members of Congress have failed to slow Trump‘s protectionist march and few have been willing to speak publicly for fear of arousing the ire of Trump and the Republican base.

The coalition hopes to push Republican lawmakers to press Trump to abandon tariffs by convincing him that his trade policy could undo his tax and deregulation push.

“The sugar high of the lower taxes and the reduced rules that have fueled the stock market since the president was elected are in jeopardy,” said Gary Shapiro, head of the Consumer Technology Association, whose members include IBM Corp and Facebook Inc. He warned that some of his members were considering layoffs.

Steve Pasierb, head of the Toy Association, whose members include Mattel Inc, Hasbro Inc and Barnes & Noble Inc said members of Congress were slow to be persuaded they needed to be concerned.

“It’s been this kind of slow build that got worse and worse and worse. I don’t think anybody in DC saw this coming.”

(Reuters)

Erdogan Says US ‘Wrong’ to Threaten Turkey After Trump Doubles Tariffs

The two governments have been at odds over a wide range of topics – from diverging interests in Syria, to Turkey’s ambition to buy Russian defence systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.

Istanbul: Turkish President Tayyip Erdogan on Saturday said it was wrong of the US to try to bring Turkey into line with threats, a day after President Donald Trump doubled tariffs on Turkish metal imports as the row between the two NATO allies deepened.

The two governments have been at odds over a wide range of topics – from diverging interests in Syria, to Turkey‘s ambition to buy Russian defence systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.

“You can never bring this nation in line with the language of threats,” Erdogan told a crowd of supporters in the Turkish town of Unye on the Black Sea coast. “I am once again calling on those in America: It is a pity that you choose a pastor over your strategic partner in NATO,” he said.

After almost 20 months in a Turkish jail, Brunson was moved to house arrest in July by a court. Since then Trump and his Vice President Mike Pence have repeatedly called for his release while Ankara said the decision was up to the courts.

Washington in response sanctioned two Turkish ministers and Trump on Friday announced it was doubling the tariffs on steel and aluminium imports from Turkey, saying relations with Ankara were “not good at this time”.

The ailing Turkish lira, which had already lost one third of its value this year largely over worries about Erdogan‘s wider control of the economy, crashed further to a fresh record low, at one point losing 18 percent, its biggest fall since 2001.

A meeting on Friday unveiling a new economic approach by Turkey‘s finance minister Berat Albayrak, Erdogan‘s son-in-law, did little to offer support for the free-falling lira as investors sought concrete steps such as an interest rate hike to restore confidence.

Erdogan on Saturday repeated a call to Turks to help support the lira to win what he described was a “war of independence”.

“If there are dollars under your pillow, take these out. If there are euros, take these out .. Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future. Because this is the language they understand,” he said.

Volatile region

An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. Financial upheaval risks further destabilizing an already volatile region.

Erdogan has cast the recent slide in the lira as a war and without naming countries said supporters of a failed military coup two years ago, which Ankara says was organized by a US-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

In an opionion piece in the New York Times, he warned the US that Ankara had other alternatives as allies.

“Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies,” Erdogan said.

Turkey, home to the Incirlik air base which is used by US forces in the Middle East, has been a NATO member since the 1950s. It is host to a critical part of the Western alliance’s missile defence system again Iran.

In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan‘s spokesman Ibrahim Kalin said Turkey‘s efforts to solve the crisis with diplomatic methods have been dismissed by the Trump administration, warning that Washington might completely lose Ankara as an ally.

“The US runs the risk of losing Turkey as a whole. The entire Turkish public is against US policies that disregard Turkey‘s legitimate security demands. Threats, sanctions and bullying against Turkey will not work,” he said.

(Reuters)

US to Impose 16 Billion Dollar Import Tariffs on China

Washington had already imposed tariffs amounting to $34 billion on July 6 but held off on a final $16 billion in goods as a result of concerns from US companies.

Washington: The Trump administration announced today that it would impose 25% tariffs on imports of 279 items from China amounting to $16 billion.

This is the second tranche of such tariffs and comes into effect on August 23.

Washington had already imposed tariffs amounting to $34 billion on July 6 but held off on a final $16 billion in goods as a result of concerns from US companies.

This is part of the US’s response to China’s “unfair trade practices” related to the forced transfer of American technology and intellectual property, the US Trade Representative (USTR) said.

After coming to power, the Trump administration has initiated steps to address the issue of massive balance of trade with China and to the alleged Chinese theft of intellectual property.

In March 2018, the USTR had released the findings of its “exhaustive” Section 301 investigation that found China’s acts, policies and practices related to technology transfer, intellectual property and innovation are “unreasonable and discriminatory and burden US commerce”.

The investigation had revealed that China uses joint venture requirements, foreign investment restrictions and administrative review and licensing processes to require or pressure technology transfer from US companies and it deprives US companies of the ability to set market-based terms in licensing and other technology-related negotiations.

It also found that China directs and unfairly facilitates the systematic investment in, and acquisition of, US companies and assets to generate large-scale technology transfer.

The USTR claimed that China conducts and supports cyber intrusions into US commercial computer networks to gain unauthorised access to commercially valuable business information.

The world’s two biggest economies are locked in a trade dispute.

But there seems no solution at sight as the Trump administration prepares for tariffs of up to 25% on an additional $200 billion in Chinese products.

(PTI)

India Enters the Trade War Game, but Leaves Harley Flame Alive for Peace Talks

These moves come ahead of assistant US Trade Representative Mark Linscott’s trip to India next week.

New Delhi: India has joined the European Union and China in hitting back at the United States with the announcement of additional tariffs on 29 American products including apples, almonds, walnuts, pulses and shrimp as a retaliatory move against President Donald Trump’s decision to unilaterally hike import duties on steel and aluminium.

New import duties will hit US exports worth $235 million when they come into effect on August 4, government sources said.

The move comes after the Modi government failed to secure an exemption from US duty hikes for steel and aluminium products.

But, in a change from its earlier decision, India has exempted Harley Davidson motorcycles from punitive duty. Earlier, it had indicated its plan to impose 50% additional duty on the iconic US bikes as a retaliatory measure.

Trump has publicly raised concerns over what he believes is the high import duty that these motorcycles attract in India.

Sources said India’s decision not to raise duties with immediate effect and exempt Harley Davidson bikes are goodwill gestures aimed at keeping alive the possibility of negotiating trade disputes when assistant US Trade Representative Mark Linscott visits India next week.

Last week, India had submitted a list of 30 items to the World Trade Organisation on which it proposed to raise import duty by up to 50% as retaliation against the unilateral US move to hike duty on steel and aluminium products.

As per the finance ministry notification, the import duty on chickpeas, Bengal gram (chana) and masur dal has been increased to 70% from 30% earlier. Lentils will attract 40% instead of 30%.

Shelled almonds imported from the US will now attract import duty at Rs 120/kg as against Rs 100/kg earlier. Almonds in shell will attract import duty at the rate of Rs 42/kg as against Rs 35/kg.

Import duty on ‘walnut-in-shell’ will attract customs duty at the rate of 120% as against 30% earlier. Apples have been subjected to import duty of 75% as against 50% earlier.

The duty on boric acid has been hiked to 17.50%, while it has been doubled to 20% on phosphoric acid.

Import duty on diagnostic reagents has been doubled to 20%. Duty on flat-rolled steel products has been hiked to 27.50% from 15% earlier, while certain flat-rolled products of stainless steel will now attract 22.50% duty instead of 15% earlier.

Meanwhile, the exemption provided by the US to steel and aluminium imports from allies like the EU, Mexico and Canada expired on June 1. Following that, the EU has slapped 25% retaliatory tariff on US goods worth 2.8 billion euros including Harley Davidson bikes. European Commission president Jean-Claude Juncker said duties imposed by the US on the EU go against “all logic and history”.

Mexico too imposed additional tariff on US products worth $3 billion as retaliation. Canada has also vowed to retaliate against the unilateral US move.

In April, China implemented retaliatory tariffs of up to 25% on $3 billion in food imports from the US against the latter’s decision to hike duties on steel and aluminium products.

Trump had announced plans for tariffs on foreign steel and aluminium in March, justifying them on national security grounds. He argued that global oversupply of steel and aluminium, driven by China, threatened American steel and aluminium producers, vital to the US.

After the announcement, South Korea, Argentina, Australia and Brazil had agreed to put limits on the volume of metals they could ship to the US in lieu of tariffs.

The US granted temporary exemptions to the EU, Canada and Mexico amid negotiations over limits. The extended deadline of June 1 has expired.

India had asked the US government to exempt it from the 25% steel tariff and 10% aluminium tariff imposed by Trump on grounds of national security. But the latter rejected India’s request. India has also moved the WTO against the US move.

India’s commerce minister, Suresh Prabhu, visited the US recently to sort out bilateral trade issues. However, he failed to achieve a breakthrough.

The US gave those allies a reprieve from the duties, but the exemptions were set to expire Friday. The Trump administration will place quotas or volume limits on other countries such as South Korea, Argentina, Australia and Brazil instead of tariffs, he said.

Addressing media at the conclusion of the recent G7 summit in Canada’s Quebec City, Trump had singled out India, accusing it of charging 100% tariff on some US goods. “We’re like the piggy bank that everybody is robbing,” Trump had said.

Meanwhile, US-China tit-for-tat tariff hikes threaten to escalate into a full-blown trade war, with Beijing saying it would place its own additional tariffs on 659 US imports worth $50 billion after Washington slapped punitive tariffs on Chinese goods.

India Retaliates Against Trumps’s Tariffs With Raised Duties on Goods

By taking this step, India expects to collect approximately $238.09 million of duty in an effort to withdraw concessions of similar amount as the US would from its hike in duties on certain steel and aluminium products.

New Delhi: India has now submitted a revised list of 30 items – including motorcycles, certain iron and steel goods, boric acid and lentils – to the WTO on which it proposes to raise customs duty by up to 50%.

As duties hiked by the US on certain steel and aluminium products would have implications of about $241 million on India, the raise in tariffs proposed by New Delhi too would have an equal implication on the US.

“The US would be collecting $241 million worth of duties by hiking tariffs on certain steel and aluminium items from India, we also proposed to withdraw concessions of similar amount from these 30 products imported by India from the US,” a source said.

Earlier in May, India proposed to raise duties by up to 100% on 20 products such as almonds, apple and specific motorcycles imported from the US.

The additional duty proposed to be hiked on these items ranges from 10% to 100%.

“The revision is being provided to adjust the products and the tariff rates in accordance with India’s rights reserved vide its notification to the Council for Trade in Goods contained in the WTO document…of May 18, 2018.

“India hereby reiterates its decision to suspend concessions or other obligations notified to the Council for Trade in Goods on May 18, 2018…of the General Agreement on Tariffs and Trade 1994 and Article 8.2 of the Agreement on Safeguards, that are substantially equivalent to the amount of trade affected by the measures imposed by the United States,” according to a communication by India to WTO.

It said that the proposed suspension of concessions or other obligations takes the form of an increase in tariffs on selected products originating in the US, based on the measures of the US.

“India reserves its right to further suspend substantially equivalent concessions and other obligations based on the trade impact resulting from the application of the measures of the US,” it added.

The country has proposed this move under the WTOs Agreement on Safeguards.

On March 9, US President Donald Trump imposed heavy tariffs on imported steel and aluminium items, a move that has sparked fears of a global trade war.

Trump signed two proclamations that levied a 25% tariff on steel and a 10% tariff on aluminium imported from all countries except Canada and Mexico.

Earlier India had stated that these suspension will come into effect earlier than June 21, 2018, in case the US decides to continue the period of application of the measures.

It said that the duty imposed by the US has affected steel exports by $198.6 million, while the same on aluminium was $42.4 million.

The other items include chickpeas, fresh apple, walnut, refined palmolein, motorcycles with an engine capacity of over 800 cc, diagnostic reagents and threaded nuts.

India has also dragged the US to the World Trade Organisation’s dispute settlement mechanism over the imposition of import duties on steel and aluminium.

India’s exports of steel and aluminium products to the US stood at about $1.5 billion every year. Its exports to the US in 2016-17 stood at $42.21 billion, while imports were $22.3 billion.

On the Verge of a US-China Trade War

Any “trade war” between these two giants will have consequences for many other smaller countries.

The world is teetering on the brink of a trade war between China and the US.

US President Donald Trump fired a new shot in the trade war on Thursday (April 5) when he said he had directed the United States Trade Representative (USTR) to consider an additional $100 billion tariff following China’s decision to retaliate against an earlier $50 billion worth of proposed tariffs.

For the record, Trump tweeted on April 4, the day the USTR listed the new tariffs on a slew of Chinese goods, “We are not in a trade war with China, because that was lost many years ago…”

An earlier round of tariffs saw the US announce 30% tariffs on imported solar panels and washing machines in January. This was followed by 25% tariff on steel and 10% on aluminium on the grounds of national security, though Mexico and Canada were exempted.

On March 22, Trump announced that the US would impose tariffs on $50 billion worth of goods. The US targeted industries like aerospace, information and communications technology, robotics and machinery. On the same day, the USTR issued a lengthy report detailing the manner in which China forced American companies to transfer key technology and trade secrets and Chinese proclivity for stealing data through hacking.

On April 2, China announced tariffs on US goods worth $3 billion on some 130 American products like fruits, nuts, wine and steel pipes, as well as pork and recycled aluminium. On April 4, following the publication of the list of items that the US would target, China listed products worth $50 billion imported from the US which would now be subject to 25% tariffs, these included soya beans, automobiles and chemicals.

The US imported $505.6 billion worth of goods from China in 2017, of which the largest category were computers and computer accessories ($77.1 billion), mobile phones ($70.3 billion), telecom equipment ($33.5 billion) and toys, games and sports goods ($26.7 billion). The current USTR lists avoid many of these items so as to spare the ordinary consumer the pain of price hikes.

The USTR action, which would cover several thousand separate tariff lines, will be reviewed further after the public notice and comment process, including hearing. It is only after all this happens that the agency will issue a final determination on the list of products that will be subject to the additional tariffs, which could now approximate $150 billion worth of Chinese imports.

There is considerable worry about where this escalation cycle can land up. There are many complexities that escape Trump’s simplistic understanding of the trade deficit issue. Actually, the issue is not just between China and the US. A “Chinese” product comprises elements from other countries.

The logo on the iPhone notes, “Designed in California, assembled in China”. The iPhone costs Apple $220. It is assembled in China for $6.50, but the rest of the cost is for its sophisticated components made in Germany, South Korea, Japan and the US. In other words, any “trade war” between these two giants will have consequences for many other smaller countries – there will be collateral damage.

The Economist says that 30% of the value of goods that China exports to the US is added elsewhere – Taiwan, Malaysia, Singapore and so on. If the situation worsens, “countries entwined in Chinese supply chains will suffer” and in its estimation, Japanese suppliers could be the worst hit in absolute terms.

As this analysis points out, Chinese value addition has the lowest value addition in the high tech sector. In the case of computers and electronics, “less than half the value added in Chinese exports come from China”. It notes that even while Chinese industrial policies are charged with trying to build up its state-owned enterprises, they account for an increasingly declining share of exports. Anyway, the big worry now is that China’s retaliation could be escalated to cover major firms like GM or Apple, even if Chinese workers are affected by it.

President Xi Jinping is expected to address the Boao Forum next week. In keeping with the Chinese posture, he will put across the country as a victim of American capriciousness and as one which is willing to play by the rules. It is also initiating a complaint in the WTO that the US was in serious violation of global trading rules by targeting Chinese goods for tariffs.

China has already signalled that it is willing to make concessions, such as those related to the opening up of the finance sector. When Trump visited China in November 2017, Beijing offered concessions like raising caps on the foreign ownership of banks and securities firms. Global firms have been cautious here because they would have to use Chinese telecom equipment for their operations and store data there as part of its laws. Chinese vice finance minister Zhu Guangyao had said that the country would allow foreign investors to own 51% of Chinese securities firms, fund managers and futures companies and allow them to own 100% three years later. The current limit on foreign ownership is 25% for large publicly traded securities firms and 49% for most other businesses. He also promised that China would raise the allowed foreign investment in insurance companies which was 50% for most companies to 51% in three years and 100% in five years.

But given the USTR focus, it seems unlikely that they will be willing to accommodate American demands which are increasingly focusing on their industrial policy that comes under the rubric of “Made in China 2025”.

This policy is key in order to modernise the country’s economy, move up the innovation chain and avoid the middle-income trap, which is something most Western economists have been telling China it must do. The Communist Party of China is fully aware of the fact that its power rests on its ability to ensure China’s positive economic trajectory. So it is unlikely to be deterred from its task by the steps taken by the Trump administration at this time.

It is not surprising that the latest round of Trump tariffs got a tough response from Beijing. Chinese authorities declared that they would fight back against US plans at any cost. Official spokespersons of the Ministry of Commerce and Foreign Affairs said that while China did not want a trade war “we are not afraid of it”.

Manoj Joshi is a distinguished fellow, Observer Research Foundation, New Delhi.