China may have 'underestimated' Trump's resolve

Galtero Lara
Junio 20, 2018

The total amount of U.S. goods exports to China only amounted to US$130 billion (S$176 billion) previous year, meaning Mr Trump's potential tariffs on US$250 billion or more of Chinese imports can not be matched, at least directly.

Apple's iPhones are assembled in China from parts manufactured in China, the US, and other countries, a process that could bring the tech giant into the forefront of the Trump administration's escalating trade actions against Beijing as well as China's retaliatory measures. The US says the new tariffs, which would be set at a rate of 10 percent, are in response to tariffs from China last week on $34 billion in US goods at a 25 percent rate.

President Donald Trump is calling for tariffs on $200 billion in Chinese imports, drawing a rebuke from China. A trade war could throw a wrench in the works. China's trade surplus with the US previous year was about $375 billion.

Wall Street is growing increasingly concerned with deteriorating trade relations between the USA and China, with the Dow's latest decline putting the blue-chip index in the red for 2018.

Outside China, however, WTI remains at a $10 per barrel discount to Brent CL-LCO1=R.

China's commerce ministry immediately responded by saying the United States "practice of extreme pressure and blackmail departed from the consensus reached by both sides during multiple negotiations and has also greatly disappointed global society".

But if one measures both exports and sales of U.S. companies inside China, the USA has a surplus of US$20 billion with China, according to Deutsche Bank.

Saudi and Russian Federation are already pushing for an increase in production at a meeting of The Organization of the Petroleum Exporting Countries (OPEC) this week.

"Risking a trade war with more tariffs will only invite more retaliation that will cause significant harm to the US economy", said the group, urging the administration instead to "work with our allies and place coordinated pressure on China to end their harmful trade and investment practices".

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Exports surged to an unprecedented 1.76 million bpd in April from 1.67 million bpd in March.

European countries, including Italy and the Netherlands, accounted for the bulk of the increase in April U.S. crude exports.

Trump has blamed the trade imbalance between the two countries for the loss of American jobs. "And I think we all agree that it is important for Canada to stand up in defence of the global rules-based order, and we will do so". That would leave about $120 billion of imports available for retaliatory tariffs after Saturday's announcement.

"Crude oil is a fungible global commodity", Evans said.

In fact, its top trade advisor insisted that Beijing has more to lose in a potential trade war with Washington. "This method leads to the loss of people's trust and harms the interests of people and enterprises from both China and the USA and harms the interests of the people of the entire world".

Russia's flagship Urals crude oil is one of the grades preferred by China's independent refiners, known as teapots.

The markets reacted badly with China's Shanghai Composite faring the worst in Asia, ending the day down 3.8%.

There was a story two days ago in a major newspaper talking about people living in Canada, coming into the United States and smuggling things back into Canada because the tariffs are so massive.

"The world's an awfully big place, consuming an terrible lot of oil, so you may not have it that much harder for to go elsewhere", said Spencer Dale, chief economist at oil major BP.

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