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China to Target Trump’s Base in Tariff Response


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China is preparing to hit back at trade offensives from Washingtonwith tariffs aimed at President Donald Trump’s support base, including levies targeting U.S. agricultural exports from Farm Belt states, according to people familiar with the matter.

The plans are part of a strategy that has taken shape in recent weeks as Beijing seeks to avert tariffs by warning of possible repercussions and offering incentives to the U.S., including better access to China’s markets, especially in the financial sector.

China’s President Xi Jinping has taken this carrot-and-stick approach in an effort to avoid a trade war, these people said.

“Any Chinese response to new U.S. tariffs would be measured and proportional,” said a Chinese official involved in policy-making.

The White House plans to announce punitive measures against China on Thursday, including tariffs on at least $30 billion in imports. Those are in addition to the steel and aluminum tariffs taking effect Friday.

In response, China is likely to target U.S. exports of soybeans, sorghum and live hogs, according to the people with knowledge of the matter. The U.S. is among the top suppliers of these products to China, which imports around a third of soybeans that the U.S. produces, data from the two countries show.

Punching Back

Beijing plans to impose tariffs on U.S. farm exporters who count on the Chinese market.

BN-XY451_backgr_4U_20180321171905.png

U.S. exports to China as a share of

all U.S. exports, by product*

%

100

Grain sorghum

$837 million

75

Soybeans

$12.4 billion

50

Live swine

$10.1 million

25

2017 U.S.

EXPORTS

TO CHINA

0

2013

’14

’15

’16

’17

*By value Source: U.S. Census Bureau

Any duties to be levied by China on those products would depend on how broad-based the U.S. tariffs are on Chinese imports, and plans could change based on what the Trump administration proposes, these people said.

Beijing is also weighing concessions including easing restrictions on foreign investment in securities firms and insurance companies, they said.

Plans for the retaliatory measures were laid out at a meeting last month convened by China’s Commerce Ministry with Chinese importers of U.S. farm products, including China National Cereals, Oils and Foodstuffs Corp., a state-owned food-processing giant. These measures were prepared in anticipation of Trump administration moves.

At the meeting, Commerce Ministry officials sought the companies’ views on the effects of scaling back U.S. agricultural imports, the people said. Since then the companies have been lining up alternatives sources—for soybeans, for instance, countries including Brazil, Argentina and Poland.

The potential retaliation is calibrated to hit states that helped elect Mr. Trump in 2016, the people said. Mr. Trump won eight of the top 10 soy and hog-producing states, and seven of the top 10 sorghum states

Boeing jet models at an aviation expo in Beijing in 2015; some outside observers say China could resort to such measures as diverting large orders for aircraft and other goods away from U.S. manufacturers.
Boeing jet models at an aviation expo in Beijing in 2015; some outside observers say China could resort to such measures as diverting large orders for aircraft and other goods away from U.S. manufacturers. PHOTO: WU HONG/EPA/SHUTTERSTOCK

Concerns about possible Chinese retaliation have weighed on crop and livestock markets in recent weeks.

“Bottom line, we’re terrified,” said Brian Grossman, a market strategist at Zaner Group in Chicago who used to farm in North Dakota. “It’s not going to be good for the American farmer.”

After The Wall Street Journal reported the possible Chinese counter-tariffs on Wednesday, shares of Bunge Ltd. , the world’s largest soybean processor, declined 0.9%, while Archer Daniels Midland Co. fell 1%. ADM and Bunge are two of the world’s largest soybean shippers, and China is far and away the world’s biggest buyer. 

An impact on pig farmers could also affect soy farmers. “We need the pigs to eat what we produce,” said Shane Hanna, who farms 1,400 acres in Delphi, Ind.

Alongside tariffs, Beijing plans extend an olive branch to the U.S., which has been calling for better access to China’s markets. The opening could include scrapping foreign-ownership limits on Chinese brokerages and insurers, they said.

U.S. and other Western officials have often treated Beijing’s market-opening pronouncements with skepticism, saying hurdles have risen despite similar pledges in the past. Early last year, for example, it promised U.S. credit-card companies “full and prompt” access to China, but so far none has been given a green light.

Liu He, Mr. Xi’s top economic deputy, laid out a series of market-opening steps to senior U.S. officials in Washington this month, including Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, according to people with knowledge of the event.

The administration officials countered with a far-reaching proposal, the people said, for China to eliminate subsidies for state firms and take other measures to reduce the U.S. trade deficit and level the playing field for American companies.

Beijing has continued to offer incentives. On Wednesday, the People’s Bank of China said foreign companies would be allowed into China’s fast-growing market for electronic-payment services—but didn’t make clear whether they would be allowed to do so without a Chinese joint-venture partner.

Trump administration officials say its measures are an answer to China’s policy of requiring U.S. businesses to transfer technology to Chinese partners. The administration also contends that Beijing improperly subsidizes companies in strategic areas such as semiconductors to help them overtake U.S. rivals.

 

China rejects those claims. “China places a high priority on protecting intellectual-property rights and improving its business operating environment,” the Commerce Ministry told The Wall Street Journal.

It’s almost obligatory for the government to respond in a somewhat defiant fashion.

—Former Commerce Department official Frank Lavin

China has other measures besides agricultural tariffs in its arsenal, including diverting large orders for aircraft and other goods away from U.S. manufacturers and slowing the wheels of bureaucracy in approving operating licenses, or even targeting U.S. companies with antitrust investigations.

“It’s almost obligatory for the government to respond in a somewhat defiant fashion,” said Frank Lavin, a former undersecretary for international trade at the U.S. Department of Commerce who now consults on China’s e-commerce market.

While China says it wants to avoid a trade war, U.S. companies operating in China are bracing. One law firm is advising clients to check their supply chains in preparation for possible higher costs and disruptions. Some government-affairs specialists for U.S. companies here said they have gone on a charm offensive with Chinese bureaucrats.

“The language we have to repeatedly tell them: how we love this country and how this market is so important to us,” one government-affairs official at a U.S. manufacturer said.

Timothy Stratford, a former assistant U.S. trade representative, said the current trade environment could prompt U.S. companies to reconsider the long-term importance of the Chinese market.

“Gradually we may feel compelled to diversify until China is not as big a part of our business plans anymore,” said Mr. Stratford, now an attorney at Covington & Burling LLP in Beijing. “These are some really strategic questions that companies are going to have to start thinking about.”

 

https://www.wsj.com/articles/facing-u-s-tariffs-china-plans-countermeasures-1521632332

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Yup, tariffs are bad, and in this case ineffective.  With lots of unintended consequences.  Tariffs are NOT the way to fight this particular problem.  China has huge overcapacity due to bad planning and a slow down in their growth rate.  They're dumping some of their excess steel on us at prices below their costs and the remedy for that is in the International Court for such claims pursuant to all trade treaties.  If that doesn't do it, or China or the Court malingers, just bar their steel.  FYI, the US, and most developed countries, have dumping and predatory pricing laws for their internal economies.

 

China's routine theft of virtually any and all intellectual property worldwide is a much bigger problem.  They totally ignore trademarks, copyrights, etc., systemically defrauding both property owners and customers world wide.  Just tell them to pony up whatever $$ amount per year looks fair (somewhere north of $100 billion, I would guess) and leave it to their dictatorship to get the $$ from their population that buys our top DVDs for less than a buck and runs everything on blueprints and software stolen from others.  No pay, no shipie anything to the US.  Our government has been allowing the Kleptocracies of the world steal everything and anything from us that's not nailed down for far too long.

 

And while we're at it, the cost of just about everything made or done in America has skyrocketed with all the extras that have to be done )or avoided) to comply with the rules of the regulatory agencies - the EPA, yeah, but all the others too that prescribe every aspect of our lives with little to no regard for cost/benefit considerations, preservation of the ability to preserve industries vital to national security, employment rates, or common sense.  They are 99% about their own power, NOT the welfare of the country or its citizens.  Well, you PC idiots, if your rules are so vital to the welfare and survival of the earth, why don't you either bar from the US, or tax the hell out of, imports to the US, that do not fully comply in their manufacture with the rules imposed on US factories?  Go a step further, adjust for the minimum labor rate differentials (huge with slave labor economies in much (including China) of the world).  If US bureaucratic rules are so vital, fair and just, how can we allow goods made outside the US that are non-compliant with those rules to the great benefit of their foreign manufacturers, and detriment of our own factories and work force (and presumedly the world environment) into the US?  Shouldn't they at least carry tariffs to equalize environmental and human rights cost differentials to level the economic playing field?  I think this scheme would demagogue well with the populist crowd and would greatly increase employment, as it would require at least another million federal bureaucrats to dream up the rules and enforce them.  And then we could have the end game: almost everybody is writing and enforcing rules, and the last few hundred guys trying to feed, protect, transport, and cure them are all either dead of heart attacks or tossed in the can for violating rules that nobody can even find in the pile.  Game over, all fall down.     

Edited by Xtaxguy
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You think real Americans give a flaming rat's azz what the filthy cheating, lying Chi-Coms do...?

 

Oh, hell no !

 

They've violated every Agreement, enabled NoKo, stolen Secrets & technology,

embedded their spies AND troops here (thanks, ho'bummer),

are undermininge our Real Estate markets (THAT really chafes Trump, BTW ),

send their slaves to squirt out "American" babies here in the assembly-line "maternity Houses" they've sprouted up all over our Country, 

and are slow-creeping take-over of International waters... on and on...

 

So we have to close some Dollar Stores, so what.

 

Americans will be forced to once again become self-reliant, resilient and Patriotic ,

y'know, like when we all pulled together during WWII....

 

Good.  Good for US.    About damned time.

 

.

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  • 10 months later...

As our enemy's would say! Play with a even playing field, NOT!

I think presidnt Trump is doing great! Cant wait for the reactions again for the next elections. Hillarious's was classic. Dont even come out to meet your supporters after the loss. Its a matter of time, she knows she's done. Lol

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On 3/22/2018 at 3:13 AM, Xtaxguy said:

With lots of unintended consequences.

thats a very generous assessment.Can't wait for our government to learn the concept of consequences for our actions. Meanwhile many will suffer ....but it is a sacrifice that our current  leaders are willing to make ....bless their hearts!

 

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