It is an unhappy Tuesday for global markets, most of which are down sharply after the announcement late Monday that President Trump directed the US Trade Representative to "identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10%". The announcement did not specify timing but the size of the threatened escalation (if not the timing;
Posted a comment, read the rest of the newsletter and deleted the comment, now posting it again... slightly different:
The newsletter worries about Apple getting punished bringing products into China, but...
What if Chinese bureaucracy simply started delaying Foxconn products on their way OUT of China? What if one office misplaced some forms, another took a week to process it, someone made a mistake so the process had to be restarted and so on, while Samsung's new Galaxy phone and Apple's next iPhone spend 3 months in containers in a Chinese port waiting for clearance...
No WTO rules broken, no tariffs, no overt 'Beijing', just local officials making understandable mistakes. Combine this with a few 'accidents' or 'robberies' on the port facilities after the media reported on all of those phones just sitting there - endless fun just before the midterm elections in the USA.
US soybean futures traded below $9/bushel briefly after being at $10.60 less than a month ago.
To date the US has shipped China 27.2 million metric tons of soybeans compared to 34.2 this time last year.
There’s also an additional 1.5 million tons of sales that haven’t been shipped and could be cancelled which are worth about $553m at today’s prices. Additionally, there’s about $3.38 billion worth of unshipped sales booked to undefined destinations, but usually these are also mostly Chinese purchases.
The presentation video and real estate hotel beach combo comments from the representative leader of the free world was pathetic IMO J K Galbraith would turn in his grave. Seriously how long are we off small nuclear rocket launchers ? the future is about small machines quantum interoperability not super computers finding the answers is "42" the future danger is small nuclear shoulder rocket launchers not country v country the future is continent v continent same old same old with scale the common enemy will be not North Korea or Iran. Working for the Yankee dollar was never sustainable inevitably each continent will have its own digital currency it’s not “rocket” science ….. In a nutshell China plc will not back down they are masters of the long-tail game whereas Trump throws (allies) cards away before the game AI has played before.
If this tariff spat shifts into services, it will strike fear into many middle and upper class Chinese families. All those thousands of Chinese students in US universities may find their visas have problems, or their schools are no longer available
here is the full white house statement on the tariffs on 200b directive, was not online when I published this AM. https://www.whitehouse.gov/briefings-statements/statement-president-regarding-trade-china-2/
On Friday, I announced plans for tariffs on $50 billion worth of imports from China. These tariffs are being imposed to encourage China to change the unfair practices identified in the Section 301 action with respect to technology and innovation. They also serve as an initial step toward bringing balance to our trade relationship with China.
However and unfortunately, China has determined that it will raise tariffs on $50 billion worth of United States exports. China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.
This latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage, which is reflected in our massive $376 billion trade imbalance in goods. This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States.
Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. After the legal process is complete, these tariffs 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. If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods. The trade relationship between the United States and China must be much more equitable.
I have an excellent relationship with President Xi, and we will continue working together on many issues. But the United States will no longer be taken advantage of on trade by China and other countries in the world.
We will continue using all available tools to create a better and fairer trading system for all Americans.
I had a stupid typo in the original--"China does not export enough to the US to match the threatened tariffs on $250B worth of PRC exports". That of course was meant to say "China does not import enough from the US to match the threatened tariffs on $250B worth of PRC exports.". Now corrected, sorry about that, head hurts from smacking it several times after realizing this...
Do we think even big oil companies like Exxon might get penalised?