Posts Tagged ‘commerce secretary Wilbur Ross’

Elizabeth Warren: Trump administration granting too few exclusions on tariffs to American companies

November 1, 2018

Democratic senator seeks explanation for disparity between foreign – and U.S.-owned companies —  “subsidiaries of foreign-owned companies—even though these tariffs are purportedly in place to protect American companies.”

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WASHINGTON—Shortly after the U.S. first imposed tariffs on steel and aluminum this year, in part to crack down on oversupply from China and its closest trading partners, the Department of Commerce granted exclusions to a handful of Chinese-owned and Japanese-owned companies with U.S. subsidiaries, enabling them to continue duty-free imports of Chinese and Japanese steel.

These exclusions are the focus of a letter from Sen. Elizabeth Warren, the Massachusetts Democrat who has been one of President Trump’s most vocal adversaries and who is asking Commerce Secretary Wilbur Ross to explain why so many foreign companies with U.S. operations and so few American companies were granted exclusions.

In a letter to the Commerce Department Tuesday, the senator asked why so many early exemptions were granted to “subsidiaries of foreign-owned companies—even though these tariffs are purportedly in place to protect American companies.”

The Commerce Department said in a statement that Sen. Warren’s analysis “betrays a lack of understanding of the exclusion process” which, it said, was designed to allow entities in the U.S., regardless of ownership, to apply for exclusions if the steel could not come from U.S. sources.

After the Commerce Department in March announced tariffs of 25% on steel imports and 10% on aluminum, it established a process by which companies could seek exclusions from those duties. Sen. Warren’s letter is focused on the first 30 days in which the Commerce Department began releasing its decisions on those requests.

The senator’s staff analyzed the first 909 decisions from the Commerce Department. More than half of those decisions resulted in waivers, they found, and fewer than 20% of those waivers were granted to U.S.-owned companies, the letter said.

The establishment of the exclusion process prompted a flood of requests. The Commerce Department required that companies submit separate exclusion requests for each unique steel or aluminum product import, prompting some companies to file hundreds of requests. More than 30,000 applications have been filed for exclusions, with about half still pending, as the department has struggled to respond to the wave of requests.

The first 909 decisions represent only about 6% of the decisions that the Commerce Department has reached so far. A systematic analysis of the other roughly 15,000 decisions was not immediately available.

The Commerce Department said exclusions have been granted in nearly all cases that no U.S. steel supplier filed an objection.

“If potential U.S. suppliers do not object to the exclusion requests, citing their ability to make the imported product, the granting of an exclusion should not hurt domestic steel production.”

The letter from Ms. Warren notes that companies headquartered in China received more than one in four steel-tariff waivers, and that nearly all of the requests that Chinese-owned companies made were granted.

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The large number of Chinese waivers is primarily due to a single company—Greenfield Industries, in Seneca, S.C., a manufacturer of drills and other industrial cutting tools. In 2009, Greenfield was acquired by a Chinese manufacturer, TDC Cutting Tools Inc., of Dalian, China.

Greenfield, which employs around 330 U.S. workers in South Carolina, imports much of its steel from the operations of its parent company. The company makes many kinds of drill bits and, because of Commerce Department rules, it had no choice but to file hundreds of exclusion requests, which were mostly granted, according to publicly-available filings.

Greenfield argued, successfully, that there was “insufficient U.S. availability” of the specific type of steel used in its products. The company said domestic steel producers only had enough capacity to supply 20% to 25% of the specific steel needed for the U.S. cutting-tool industry.

The company also noted that it operated in an economically depressed area, and that its competitors were primarily companies that had off-shored their operations and did not have to pay such large tariffs overseas.

No single Japanese company accounted for such a large share of granted exclusions. Companies receiving exclusions include divisions of Nachi-Fujikoshi Corp. , Marubeni-Itochu Tubulars Americas Inc., Mitsui Co., Daiwa Can Co., Kanematsu Corp. and the Murata Spring Co.

When the steel and aluminum tariffs were first announced, many trading partners, including Canada, Mexico and the European Union were given temporary exemptions. But Japan and China were among countries that were hit with the tariffs immediately, and so companies importing that steel knew that they would have to apply for exclusions.

The Japanese-owned companies successfully argued that the types of steel they imported had little or no U.S. production.

Many American companies made similar requests that were denied. In the first 90 days, only 25% of exclusion requests from U.S. companies were approved, compared to around 90% of the requests from Japanese-owned and Chinese-owned companies, according to the figures compiled by Ms. Warren’s staff.

The steel and aluminum tariffs were imposed under Section 232 of the Trade Expansion Act of 1962, which allows the imposition of tariffs when the Commerce Department determines that imports are a national security threat.

The exclusion process on those tariffs has been an ongoing source of bipartisan complaint, and the letter from Ms. Warren is the latest to raise concerns. Mr. Ross has drawn sharp questions in several congressional hearings, and many lawmakers have publicly argued for manufacturers in their district to receive exclusions.

Rep. Kevin Brady (R., Texas) the chairman of the House Ways and Means Committee, said in May that the “product-exclusion process just isn’t working.”

In August, Sen. Ron Johnson (R., Wis.) wrote to Mr. Ross that “although you promised that the exclusion process would be ‘fair and transparent,’ a number of Wisconsin business leaders have expressed concerns to me about the uncertainty and arbitrary nature of the exclusion process.”

Write to Josh Zumbrun at Josh.Zumbrun@wsj.com

Corrections & Amplifications 
The analysis of tariff exclusions by Sen. Elizabeth Warren’s staff covered the first 30 days of decisions from the Commerce Department. An earlier version of this article incorrectly stated the analysis covered the first 90 days of decisions from the Commerce Department. (October 31, 2018)

Appeared in the November 1, 2018, print edition as ‘Fairness Of Tariff Waivers Questioned.’

https://www.wsj.com/articles/lawmaker-faults-tariff-waivers-fairness-1540996344

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Republicans, Save Your Party by Impeaching the President

August 27, 2018

WSJ Op-Ed: Trump traduces the GOP’s guiding principles as he erodes the foundations of our country.

By Tom Steyer — “Need To Impeach”
T-shirts on display at a "Need To Impeach" event in Detroit, Aug. 13.
T-shirts on display at a “Need To Impeach” event in Detroit, Aug. 13. PHOTO: ANTHONY LANZILOTE/BLOOMBERG NEWS
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As news spread that Michael Cohen’s plea deal had all but named President Trump as an unindicted co-conspirator in a federal crime, I thought back to a conversation I had earlier this summer in South Carolina.

A woman approached me at the end of our Need to Impeach Town Hall in Columbia, where I’d discussed the threat Donald Trump poses to our democracy. At 52, she was a lifelong Republican, but she couldn’t understand why her party’s elected leaders wouldn’t stand up to Mr. Trump.

“We’re under attack by our own president,” she told me.

She’s far from the only GOP supporter who feels this way. More than 500,000 people who have added their voices to our call to impeach Mr. Trump and ultimately remove him from office identify as Republicans. When I meet these voters at our Town Hall events, they often tell me how disgusted they feel watching Mr. Trump trample their party’s core beliefs as he erodes the foundations of our country.

The GOP, as they’ve told me, has always emphasized that America must be a nation of laws. At the 2016 Republican National Convention, party leaders agreed on a platform asserting that “the rule of law is the foundation of our Republic.” Yet Mr. Trump has been dismantling the rule of law to try to protect himself.

He has repeatedly tried to hamper special counsel Robert Mueller’s investigation into Russia’s role in the 2016 elections. He bragged that he fired James Comey in an effort to end that investigation, signaled that he may pardon allies caught in the probe, and has even claimed he has an “absolute right” to pardon himself. His legal team has justified this by claiming that he is effectively above the law—a gravely worrying stance given the new allegations of criminal behavior made by his former personal lawyer.

From day one, Mr. Trump’s administration has made a mockery of a party platform that states opposition to “crony capitalism and corporate welfare.” The decision to lift the federal government’s ban on ZTE—a Chinese telecom giant that had illegally sold American technology to Iran and North Korea—came just after Chinese banks and state-owned companies invested $1 billion in a Trump Organization real-estate project.

Mr. Trump’s former administrator of the Environmental Protection Agency, Scott Pruitt, was forced to resign after sending his staff on personal errands while allegedly soliciting gifts from industries the EPA was supposed to regulate. Media reports suggest that Commerce Secretary Wilbur Ross might have committed insider trading last year using information he received as part of his official duties.

The Republican platform criticizes Democrats for what it describes as a failure to “stand by allies or stand strong against our foes.” Yet this president has alienated allies with insults, threats and destructive tariffs while embracing dangerous authoritarians like Kim Jong Un and Vladimir Putin. At his meeting with Mr. Putin in Helsinki last month, Mr. Trump questioned our foreign intelligence services on a global stage, revealing that he can’t be trusted to put America’s interests first.

Take your pick of the GOP’s guiding principles—moral leadership, fiscal responsibility, the importance of family. Mr. Trump’s behavior runs contrary to virtually all of them. Some longtime Republican stalwarts, like Steve Schmidt and George Will, have renounced the GOP in response. More have convinced themselves they can ignore the president’s cruelest and coarsest qualities and instead focus on the ways he’s advanced their policy agenda. But no one should set aside their values to accommodate his. Instead, Republicans should seize an opportunity to reclaim their party and stand up for their ideals, by joining the push for impeachment.

The Framers of the Constitution created the impeachment process to meet what James Madison described as the “indispensable” need for a defense against “the incapacity, negligence or perfidy of the chief Magistrate.” The nonprofit Free Speech for People has identified nine impeachable offenses, ranging from Mr. Trump’s intended obstruction of justice to his abuse of the pardon power. Republicans in the House—particularly those retiring, like Speaker Paul Ryan —should find the courage to act.

At that same South Carolina town hall, another attendee told me that while he typically votes Republican, “My wife and I like to say we’re not Republicans or Democrats, we’re Americans.” They understand that the movement to impeach Mr. Trump and remove him from office isn’t partisan. It’s patriotic. After all, if it succeeds, the Oval Office will still be occupied by a Republican until at least January 2021.

Ideological disagreements and policy goals shouldn’t blind anyone to the ways this president puts our democracy at risk and our values under siege, or the need to act as a result. Mr. Trump demonstrated his unfitness for office long before Mr. Cohen implicated him in a federal crime. If Americans across the political spectrum demand his removal, we can force him out.

Mr. Steyer is the founder of Need to Impeach and NextGen America.

https://www.wsj.com/articles/republicans-save-your-party-by-impeaching-the-president-1535311432

US adds tariffs on another $16 bn in Chinese goods as talks continue

August 23, 2018

The United States Thursday imposed steep import tariffs on another $16 billion in Chinese goods over what Washington has called rampant theft of American technology, even as trade negotiators were in talks to avert further confrontations.

The latest action completes the first round of $50 billion in products that President Donald Trump targeted, after $34 billion in goods were hit with punitive duties on July 6.

China has said it will react immediately with tariffs on the same amount of US goods, targeting iconic products like Harley motorcycles, bourbon and orange juice, among hundreds of others.

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It came as the world’s two largest economies were holding their first formal discussion since June on the spiraling and multifaceted trade war.

Trump has pushed aggressive trade actions to lower the US trade deficit, which he equates with theft from Americans. But US trading partners have retaliated aggressively, which is hurting American farmers, manufacturers and consumers.

US businesses have become increasingly concerned about the tariffs that are raising prices for manufacturers and could hurt the economy, although the prospect of a negotiated solution buoyed Wall Street this week.

However, Federal Reserve officials have warned that “an escalation in international trade disputes was a potentially consequential downside risk for real activity,” according to the minutes of the July 31-August 1 policy meeting.

A large-scale and prolonged dispute likely would adversely impact business sentiment, investment spending and employment, the officials warned, and boost prices, which would “reduce the purchasing power of US households.”

And still pending are the possibility of new duties on another $200 billion in Chinese goods, which are the subject of public hearings this week, as well as Trump’s proposed 25 percent taxes on all auto imports to protect the US industry.

But Commerce Secretary Wilbur Ross said China will not be able to continue to retaliate at the same pace as the United States.

“Naturally they’ll retaliate a little bit. But at the end of the day, we have many more bullets than they do. They know it,” Ross said on CNBC. “We have a much stronger economy than they have, they know that too.”

Trump, who has threatened to target all $500 billion in goods the US imports from China, has made that same point, noting that Beijing cannot continue to retaliate in kind since it imports less than $200 billion a year in American goods.

– Talks continue –

US Treasury’s David Malpass, undersecretary for international affairs, is leading two days of talks with China’s Vice Commerce Minister Wang Shouwen, and Chinese Vice Finance Minister Liao Min that began Wednesday.

The talks were to continue Thursday morning, but the Treasury has not specified what topics are being discussed.

Trump said earlier this week that he was not expecting much from the dialogue.

“We are a country that has been ripped off by anybody and we are not going to be ripped off anymore,” Trump said at a campaign rally in West Virginia on Tuesday.

“It has to be a two-way street. We only have one-way streets not only with China but everybody.”

Thousands of large and small companies and industry groups have urged the Trump administration to reconsider the tariffs which some say could put them out of business.

But so far the Trump administration has largely been deaf to the complaints, as only a handful of product lines have been shielded from the punitive duties.

The administration already was forced to announce a $12 billion aid program for farmers hurt by the trade wars, as US agricultural products, like soybeans, were an easy target for China and others.

AFP

Wilbur Ross: ‘Too Early to Say’ Whether National Security Probe Will Bring Auto Tariffs

July 19, 2018

Commerce Department hearings are part of an investigation into whether a 1962 law can be used to impose duties on foreign-sourced cars and car parts

Commerce Secretary Wilbur Ross says the government is still analyzing whether it will impose tariffs on imported vehicles and auto parts.
Commerce Secretary Wilbur Ross says the government is still analyzing whether it will impose tariffs on imported vehicles and auto parts.PHOTO: ANDREW HARRER/BLOOMBERG NEWS

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WASHINGTON—Commerce Secretary Wilbur Ross said Thursday that it is “too early” to say whether the Trump administration will move ahead with proposed tariffs of up to 25% on imported vehicles and auto parts.

Speaking ahead of a hearing in Washington, Mr. Ross said the government is still analyzing whether it will impose tariffs on national security grounds, following a similar move on metals imports earlier this year.

“It’s obvious by the attendance here this morning how vital this industry is to the U.S. and global economy,” Mr. Ross said.

The Commerce Department hearings are part of an investigation launched in May into whether the Trump administration can use a 1962 national-security law to impose duties on foreign-sourced cars and car parts.

The Trump administration’s hard line has won praise in some quarters, including the country’s largest automotive labor union, the United Auto Workers, which has expressed qualified support and criticized industry moves to shift production outside the U.S.

Representatives for the biggest auto makers, components suppliers and dealers are expected to testify Thursday against the tariffs, arguing they would hurt the economy and put jobs at risk by raising consumer prices and sparking a trade war.

Donald J. Trump

@realDonaldTrump

I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!

The European Union said earlier Thursday that it would retaliate if the U.S. imposes tariffs on imports from Europe, cautioning Washington against unilateral measures that threaten global free-trade.

Opponents of proposed tariffs also include the American Automotive Policy Council, a lobby representing General Motors Co. , Ford Motor Co. and Fiat Chrysler Automobiles N.V .

“There is no evidence that automotive imports pose a threat to national security,” said Matt Blunt, president of the group. Mr. Blunt, former governor of Missouri, said there is domestic capacity to meet any national-security requirements.

Auto industry officials have grown increasingly alarmed at the prospect of adding yet another tariff to those already imposed by the White House earlier this year on aluminum, steel and some Chinese-made goods.

Peter Welch, president of the National Automobile Dealers Association, said “a 25% tariff applied to all imports would hurt auto manufacturers, dealers, consumers and the economy as a whole. And the hardest hit would be our customers.”

Most of the groups testifying Thursday were aligned against automotive tariffs, a contrast to previous Commerce Department hearings on Chinese imports that attracted businesses and lobbying groups both in support of and in opposition to White House policy.

One of the few voices favoring a tougher approach to auto trade policy is Jennifer Kelly, the director of the UAW’s research department, who called the government’s investigation long overdue after “decades of disinvestment.”

Ms. Kelly said the UAW supports “targeted” measures but stopped short of endorsing across-the-board tariffs. Trade tactics, she added, should take into account the globalized nature of the industry. “Any rash actions could have unforeseen consequences, including mass layoffs of American workers, but that doesn’t mean we should do nothing,” she said.

Write to Josh Zumbrun at Josh.Zumbrun@wsj.com and Chester Dawson at chester.dawson@wsj.com

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U.S. exempts certain steel products of Japan, four other nations from 25% import duties

June 21, 2018

The Commerce Department said Wednesday it has exempted some steel products from Japan and four other countries from the U.S. global tariffs of 25 percent on steel imports.

The exemption applies to seven U.S.-based companies importing steel products from Japan, Sweden, Belgium, Germany and China, the department said.

It was the first time that the United States has taken such action on a product basis since President Donald Trump invoked global tariffs of 25 percent on steel and 10 percent on aluminum in March, citing the need to defend “national security.”

The action covers 42 “exclusion requests” from the seven companies, including razor maker Schick Manufacturing Inc. of Connecticut, cutting tool maker Nachi America Inc. of Indiana and specialty steel supplier Hankev International Inc. of California.

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U.S. Commerce Secretary Wilbur Ross attends a Senate Finance Committee session discussing U.S. President Donald Trump administration’s imposing of tariffs on steel and aluminum in Washington Wednesday. | GETTY IMAGES / VIA KYODO

But it was not known for which products manufacturers from the five countries have won the exemptions.

The decision came after a process to determine whether the domestic industry can provide those products of a satisfactory quality and in sufficient quantity, as well as whether it is in the U.S. national security interest to grant an exemption for a specific product, according to the department.

“This first set of exclusions confirm what we have said from the beginning — that we are taking a balanced approach that accounts for the needs of downstream industries while also recognizing the threatened impairment of our national security caused by imports,” Commerce Secretary Wilbur Ross said in a statement.

The Trump administration initially exempted Argentina, Australia, Brazil, Canada, the European Union, Mexico and South Korea from the import duties, but drew criticism for imposing the tariffs on Canada, the European Union and Mexico on June 1.

The tariffs were apparently targeting China as the administration continued to push the emerging powerhouse to reduce its excess capacity — and exports — in these metals, a situation that Trump claims undermines American industry and jobs.

https://www.japantimes.co.jp/news/2018/06/21/business/u-s-exempts-certain-steel-products-japan-four-nations-25-import-duties/#.WytC_KdKiUk

White House Is Confident It Has an Edge Over China in Trade Dispute

June 20, 2018

Behind new tariff threats is a belief the U.S. has the upper hand in talks, administration officials say

President Donald Trump’s announcement about potential new tariffs surprised Chinese officials. Above, Mr. Trump on Capitol Hill Tuesday.
President Donald Trump’s announcement about potential new tariffs surprised Chinese officials. Above, Mr. Trump on Capitol Hill Tuesday.PHOTO: ALEX BRANDON/ASSOCIATED PRESS

President Donald Trump’s escalation of trade threats against China reflects his belief that Washington increasingly has the upper hand in the dispute, administration officials said, adding he is prepared to withstand pressure from U.S. businesses that might suffer from the conflict.

Mr. Trump caught Chinese officials off guard with his announcement Monday evening about potential new tariffs. Should China retaliate against U.S. trade policies, the White House said, the U.S. would apply tariffs of 10% on as much as $400 billion in Chinese imports. China had earlier threatened to retaliate against the U.S.’s initial round of 25% tariffs on $50 billion on imports announced last week. The bulk of those tariffs go into effect July 6.

News of the new tariffs and the prospect of a trade war roiled global markets Tuesday. The Dow Jones Industrial Average fell 1.1% and the Shanghai Composite Index dropped 3.8% to its lowest level since mid-2016. Indexes in major exporters Germany and France slid more than 1%. Commodities prices also took a hit, with soybean prices dropping 2.2% to their lowest level in more than two years.

The White House’s tough stance represents the ascendancy, for now, of trade hawks in the administration, particularly White House senior trade adviser Peter Navarro and U.S. trade representative Robert Lighthizer. Both officials argue China represents a fundamental threat to the U.S. that needs to be countered, even at the cost of pain to the U.S. economy.

“It’s clear that China has much more to lose” than the U.S. from a trade fight, said Mr. Navarro.

Mr. Lighthizer said additional tariffs wouldn’t be imposed until the U.S. picked the products, and received industry comment, a process that will take months and leaves open the possibility of additional negotiations. But so far there is no indication that such talks are on the horizon, and the Trump administration is signaling that it is increasingly confident of achieving goals through a dramatically more confrontational approach to China.

Although Chinese government officials pledged to fight back forcefully, they didn’t give any details of what they might do, as they have in the past.  Beijing has threatened to match the initial U.S. tariffs dollar-for-dollar and impose them on the same day as the U.S. acts.

Next up from the administration is a plan to halt Chinese investment in U.S. technology, due to be released by the Treasury Department by June 30. Under the plan, which is still being developed, the U.S. would use a law designed to address national emergencies to block Beijing from acquiring what the White House calls “industrially significant technology.” Export controls on such technologies would also be tightened, say administration officials.

Mr. Trump has backed away from threats before, and sided with advisers who take a less confrontational attitude toward China, including Treasury Secretary Steven Mnuchin. In April, Mr. Trump threatened a dramatic increase in tariffs on Chinese goods, but didn’t follow through. Instead, he approved negotiations Mr. Mnuchin led to get China to buy more U.S. goods and make changes to its tariffs and other trade barriers. That led to a temporary reprieve in the tensions as the two sides sought to negotiate a truce.

The White House has since judged those efforts a failure, especially after Mr. Mnuchin and Mr. Trump were criticized by cable TV hosts and some lawmakers of being weak on China. During a June trade mission to China by Commerce Secretary Wilbur Ross, Beijing offered to buy nearly $70 billion in U.S. farm, manufacturing and energy products if the Trump administration abandoned tariff threats. Mr. Trump rejected that offer as another empty promise.

“The other side may have underestimated” if they thought the White House could be swayed by pledges of purchases, said Mr. Navarro. “That was a miscalculation.”

The hard-liners in the Trump administration increasingly believe Beijing is vulnerable on trade because China exports far more merchandise to the U.S.—$505.5 billion last year—than the U.S. sends to China. In 2017, the U.S. exported goods worth $129.9 billion to China. Mr. Navarro said the U.S. goal is “enforceable, accountable, systematic change” in Chinese economic and trading practices.

Although global trade now accounts for less than one-third of China’s gross domestic product, compared with nearly two-thirds in 2006, strong exports were a big reason why China’s growth exceeded the government’s target last year. A sharp slump in exports in the coming months, economists say, could threaten growth just as investments in Chinese factories and other fixed assets are slowing to multiyear lows, while Chinese household consumption is starting to weaken.

U.S. officials also note another vulnerability of their Chinese counterparts: While China imports less than the U.S., its economic growth is more dependent on what it does import, especially on the machinery and technology.

China has plenty of weapons it can employ to respond to the confrontational U.S. trade policies, including stepped-up regulations of American companies operating in China and stirred-up nationalist resentment.

In recent years, China has banned group travel to the Philippines, Japan and South Korea, during disputes with those nations, depriving them of revenue, according to officials in those countries. Beijing also has organized consumer boycotts and selectively increased inspections by regulators, say foreign companies in China.

At a closed-door meeting with a group of Chinese and U.S. economists and government advisers in late March, Lou Jiwei, China’s former finance minister who now heads the country’s national pension fund, said China won’t be bullied into doing what the U.S. wanted the way Japan did in its trade dispute with the U.S. in the late 1980s and early 1990s.

China isn’t the U.S.’s “mistress,” Mr. Lou told the group, according to people familiar with the meeting. “China and the U.S. are like a married couple,” he said.

The White House says it is protecting U.S. technology, which Mr. Navarro and others describe as America’s “crown jewels,” from Chinese predation. Beijing obtains U.S. technology by stealing it, the White House alleges, and by forcing U.S. companies in China to transfer technology to Chinese firms.

Tariffs are the first line of defense. Administration officials say the new tariffs will change incentives for foreign firms and prompt them to move manufacturing operations from China. Even if they relocate elsewhere in Asia rather than the U.S., that’s a plus, the officials argue, because it will hinder China’s ability to acquire advanced technology.

Josh Kallmer, senior vice president at the Information Technology Industry Council, a trade association of high-technology firms, says the administration’s plans would hurt U.S. companies by driving up costs and making them uncompetitive.

The Trump administration’s threatened tariffs “are not just counterproductive, they are irresponsible,” he said. “You can’t just pick up a factory and move it to Vietnam. It takes years to move physical operations. It takes months to renegotiate contracts. It’s not a practical solution.”

Administration officials counter that U.S. firms adapt more quickly than they acknowledge. They also argue that reducing Chinese influence over U.S. companies is worth the short-term pain. If U.S. companies are eventually able to operate in China without fear of government pressure, “this economy will be stronger, the global economy will be stronger,” said Mr. Navarro.

On trade issues, U.S. big business has little sway among hardliners in the White House, who believe American corporations have been too quick to outsource jobs. Recognizing that, corporate lobbyists are working with consumer and farm groups, which are influential in coming midterm congressional races.

Additional tariffs on Chinese goods are bound to hit consumer products, they say, which could spark a backlash. Beijing has threatened to focus retaliatory tariffs on U.S. farm goods, hoping to produce a similar reaction.

Write to Bob Davis at bob.davis@wsj.com and Lingling Wei at lingling.wei@wsj.com

Appeared in the June 20, 2018, print edition as ‘White House Sees Edge in China Talks.’

https://www.wsj.com/articles/white-house-sees-an-edge-in-trade-dispute-with-china-1529451511

How China Skirts America’s Antidumping Tariffs on Steel

June 4, 2018

Government-backed manufacturers have avoided steep U.S. and EU levies by shutting production at home and expanding overseas

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Three years ago, the steel mill outside the small city of Smederevo, Serbia, appeared headed for the scrap heap.

The Serbian government, which owned the mill, had stopped subsidizing it after six straight years of losses. Hemorrhaging cash, it struggled to buy spare parts and raw materials such as iron ore.

“It was like trying to drive a car without tires,” says Siniša Prelić, a union leader at the factory.

Now production is hitting all-time highs under its new owner, Hesteel Group, a Chinese state-owned steel producer. Exports from the plant, which is backed by tens of millions of dollars from Chinese state banks and investment funds, are surging. And it has started shipping steel to the U.S.

As the Trump administration ramps up its fight against Chinese steel and Commerce Secretary Wilbur Ross ended trade talks with Beijing over the weekend without a settlement, U.S. officials are confronting a strategic shift from China’s state-backed manufacturers. For the past several years, they have been shutting production at home and expanding overseas, fueled by tens of billions of dollars from Chinese state-owned lenders and funds.

By owning production abroad, Chinese steelmakers aim to gain largely unfettered access to global markets. Their factories back in China are constrained by steep tariffs imposed by the U.S. and numerous other countries—largely before President Donald Trump took office—to stop Chinese steelmakers from dumping excess production onto world markets. But their factories outside China face few so-called antidumping tariffs.

The Trump administration in March jolted the global trading system by imposing additional tariffs of 25% on all imported steel and 10% on aluminum, a move aimed at ratcheting up pressure on China to shut domestic steel and aluminum plants. (Last week, those tariffs were extended to Canada, Mexico and the European Union.) The EU is considering its own tariffs to stop metals exports blocked by the U.S. tariffs from flooding into Europe.

Even though the new U.S. tariffs apply to Chinese steelmakers that moved production abroad, the moves are still paying off. The Trump tariff rate is much lower than existing U.S. antidumping tariffs on steel produced inside China, which often exceeded 200%.

A spokesman for Hesteel declined to comment. China’s Ministry of Industry and Information Technology, which oversees the steel and aluminum industries, didn’t respond to inquiries.

Chinese overcapacity has depressed global steel prices and wreaked havoc on China’s competitors. After cajoling Beijing to cut domestic capacity, Western officials have watched with exasperation as Chinese companies boost production around the world. And Western industry executives worry the overseas investments are helping Chinese steelmakers avoid the antidumping tariffs that governments have imposed to protect their companies against allegedly unfair Chinese trade practices.

Chinese steel production rose sevenfold between 2000 and 2013. A worker helps load steel rods at a plant in Hebei province.
Chinese steel production rose sevenfold between 2000 and 2013. A worker helps load steel rods at a plant in Hebei province. PHOTO: KEVIN FRAYER/GETTY IMAGES

China’s steel-production boom took off around the turn of the century as Beijing threw its support behind a sector seen as vital to the nation’s emergence as a global economic power. The 2008 financial crisis prompted Beijing to undertake an economic stimulus program that included the construction of hundreds of new steel plants. Chinese steel production rose sevenfold between 2000 and 2013, when it accounted for half of all global capacity.

By 2013, China’s domestic economy was slowing, leading Chinese steel and aluminum producers to flood global markets and drive down prices. The average price of Chinese steel exports fell by about 50% between 2011 and 2016.

Governments around the world responded by imposing more than 130 antidumping tariffs against Chinese metals manufacturers, mostly on steel, depriving the domestic market of an important outlet.

Beijing responded by ordering capacity cuts: a net of 150 million tons of annual steel capacity is slated to be shut between 2016 and 2020, as are aluminum plants that were built without government approval. At the same time, in 2014, the government launched a plan, called International Capacity Cooperation, that enlisted Chinese state financial institutions to help manufacturers add production overseas.

Analysts and Western government and industry officials say Chinese manufacturers are receiving hundreds of billions of dollars of state support to build and purchase plants on foreign soil, through money provided by institutions such as China Development Bank, Bank of China and funds like China Investment Corp. The overseas plants are likely to be tapped as exclusive suppliers for the “One Belt, One Road” initiative, Beijing’s trillion-dollar infrastructure plan to project economic influence across Eurasia and Africa.

“China is just moving whole industrial clusters to external geographies and then continuing to overproduce steel, aluminum, cement, plate glass, textiles, etc.,” says Tristan Kenderdine, research director at Future Risk, a consulting firm that tracks China’s overseas investments. “None of this is economically viable under a supply-demand regime without state subsidies.”

Big Steel in ChinaBeijing has sharply increased domestic steel-production capacity and has made far more steel than it hasused inside the country.Sources: World Steel Association (production, use); Group of 20 nations and the Organization for Economic Cooperation andDevelopment (capacity)
.billion metric tonsDomestic productionDomestic useDomestic capacity2007’08’09’10’11’12’13’14’15’16’170.30.40.50.60.70.80.91.01.11.2Domestic usex2012x0.603 billion metric tons

Chinese steel companies have signed agreements to build plants in Malaysia, Pakistan, India and elsewhere.

In northern Brazil, a Chinese consortium is expected to break ground later this year on an $8 billion project to build one of the world’s biggest steel plants, expanding Brazil’s potential steel output even though the industry there operates at less than 70% of capacity.

“This is total nonsense, with all the idle capacity that we have,” says Alexandre Lyra, chairman of the Brazilian Steel Institute, which represents Brazilian producers.

Chinese companies also are building new steel mills in Indonesia. Last year, Tsingshan Group Holdings, a state-backed steel producer based in Wenzhou on China’s southeastern coast, opened a two-million-ton stainless-steel plant on the Indonesian island of Sulawesi that accounts for 4% of the world’s stainless-steel production. The mill, built using a $570 million loan from the China Development Bank, is now pushing down prices from Asia to the U.S., industry executives and analysts say.

“We are seeing tenders in the area from Tsingshan at very, very, competitive prices,” Miguel Ferrandis Torres, financial director at stainless-steel companyAcerinox , told analysts in April. Tsingshan is likely losing money on those shipments from its Indonesian plant, Mr. Torres said.

Tsingshan declined to comment.

Tsingshan’s product is entering the U.S. through a joint venture with Pittsburgh-based stainless-steel producer Allegheny Technologies Inc. The joint venture is restarting a stainless-steel rolling plant in western Pennsylvania that Allegheny had shut in 2016 partly because of pressure from inexpensive Chinese imports. The new company is importing 300,000 metric tons of semifinished stainless-steel slabs from Tsingshan’s Indonesian plant—replacing slab Allegheny made in a now-closed production line—and processing them into sheets for products ranging from household appliances to medical equipment.

That put downward pressure on U.S. stainless-steel prices last year, industry executives say. “We’re moving from being a high-cost producer, which we’ve been for a while, to being the low-cost producer in the market,” Robert Wetherbee, an Allegheny executive, told analysts in November.

The Trump tariffs that came into force in March hit the stainless steel Tsingshan was importing from Indonesia to its joint-venture plant in Pennsylvania. Allegheny has asked the Trump administration for an exemption from the tariffs on those imports.

Tsingshan is expanding its Indonesian plant, and Jiangsu Delong, a Chinese producer based in Jiangsu province, is building another plant nearby. Those projects alone will increase global stainless-steel capacity by 9% from 2017 levels, according to Michael Finch, a steel analyst at CRU Group in London, even though the stainless-steel industry has significant spare capacity.

Hebei province, a pollution-choked region near Beijing, is home to steelmaking operations like this one in Qianan.
Hebei province, a pollution-choked region near Beijing, is home to steelmaking operations like this one in Qianan. PHOTO: NG HAN GUAN/ASSOCIATED PRESS

In 2014, officials from Hebei province, a pollution-choked steelmaking region near Beijing, began hunting for overseas investments for the province’s most important company: Hebei Iron & Steel Group, renamed Hesteel Group in 2016.

When Hebei officials approached the Serbian government in 2014 about investment opportunities in the country, Belgrade immediately thought of the Železara Smederevo steel company, which had a mill on the Danube River, say people familiar with the deal.

The Serbian government had purchased the plant in 2012 for $1 from United States Steel Corp. After shutting the plant for several months, Belgrade restarted it to make it attractive for potential buyers, pumping tens of millions of dollars into it to keep it alive.

But with its public finances deteriorating, Serbia in 2014 sought a standby loan facility from the International Monetary Fund, which along with the European Commission, ordered it to stop subsidizing the steel company.

In early 2015, the Serbian government pulled the plug on subsidies for Železara, says Bojan Bojkovic, who was in charge of efforts to sell the mill for the Serbian government. “A lot of people, especially so-called economists, wanted to shut it down immediately,” he says.

Meanwhile, in March 2015, Hesteel signed an agreement with China Investment Corp., which has more than $200 billion in foreign assets, to fund Hesteel’s overseas expansion.

Beijing touted the $54 million acquisition of the steel plant in Serbia as one of China’s flagship overseas investments.
Beijing touted the $54 million acquisition of the steel plant in Serbia as one of China’s flagship overseas investments. PHOTO: NEMANJA CABRIC/XINHUA/ZUMA PRESS

During the talks with the Serbians, Hesteel pledged to invest at least $300 million in the plant over the next three years. Beijing touted the €46-million ($54 million) acquisition as one of China’s flagship overseas investments. Chinese President Xi Jinping visited the mill for the June 2016 signing ceremony.

Hesteel executives have said that they quickly turned around the money-losing plant after taking control in June 2016. Serbian corporate records show an operating loss of $34 million over the next six months. Records for 2017 aren’t yet available.

“This is all part of a huge political initiative,” says  Markus Taube, professor of East Asian economic studies at the Mercator School of Management in Duisburg, Germany. “They are extremely insensitive to losses.”

The EU for years has applied tariffs to low-price Chinese steel exports. Now, Hesteel’s Serbian plant can export tariff-free into the 28-nation bloc.

“We feel like the Serbian plant is a Trojan horse,” says Sonia Nalpantidou, a trade-policy expert with Eurofer, a trade association representing EU steel producers.

At a steel expo in Beijing last month, a “Hesteel of the World” banner hung near the company’s booth. Pins in a map marked countries where Hesteel had invested—Serbia, Macedonia, Switzerland, South Africa, Australia and the U.S. A company representative said overseas expansion is now a core strategy. The company is planning to build more plants in regions such as North America, she said, and plans to derive 20% of revenue from non-Chinese markets by 2020.

“Products made in Europe shouldn’t be subject to European tariffs,” the representative said.

Late last year, Hesteel offered $1.5 billion for a large steel mill in Slovakia owned by United States Steel, according to a person familiar with the talks. The Slovak prime minister said last month that U.S. Steel wouldn’t sell the plant to Hesteel. A U.S. Steel spokeswoman declined to comment.

After purchasing the plant in Serbia, Hesteel began selling its output onto the U.S. market.
After purchasing the plant in Serbia, Hesteel began selling its output onto the U.S. market. PHOTO: MARKO RISOVIC FOR THE WALL STREET JOURNAL

After purchasing the plant in Serbia, Hesteel began selling its output, including a sheet-steel product called wide hot-rolled coil, onto the U.S. market through Duferco, a Swiss trading company in which it owns a 51% stake.

Since 2001, China’s domestic producers of that product have faced antidumping tariffs of more than 64% at U.S. borders, effectively shutting them out of the market. Hesteel’s Serbian plant could export to the U.S. with minimal tariffs—until the additional Trump tariffs took effect earlier this year.

In March, one of the Serbian plant’s U.S. customers, Priefert Ranch Equipment of Mt. Pleasant, Texas, asked the Trump administration for an exemption from the tariff to import 28,000 metric tons of steel sheet annually made at the plant. Priefert argued that it has long relied on overseas steel mills to supply product that domestic mills don’t produce. Priefert executives didn’t respond to a request for comment. The Trump administration hasn’t yet decided on the request.

“We want to be the world’s Hesteel,” Yu Yong, the company’s chairman, said when signed the deal to buy the Serbian plant. He pledged to make the Serbia plant “the most competitive steelmaker in Europe.”

Write to Matthew Dalton at Matthew.Dalton@wsj.com and Lingling Wei at lingling.wei@wsj.com

Another Sad Day For U.S. Trade, Relations With The World

June 1, 2018
I analyze export-import data, connecting it to trade policy, life  Opinions expressed by Forbes Contributors are their own.

President Trump pumps his fist to the crowd as he arrives at Ellington Field Joint Reserve Base in Houston, Texas on Thursday. (Photo by JIM WATSON/AFP/Getty Images)

Forbes

The good news is that people are talking about trade. It makes a guy like me a little more topical at dinner parties.

The bad news is, we are talking about trade for all the wrong reasons.

The most recent affront is President Trump’s indefensible decision Thursday to impose steel and aluminum tariffs on national security grounds against countries previously treated like allies, countries that have largely fought on our side in the last two world wars as well as a several countries that didn’t but that have been among our most loyal friends for more than half a century.

Let’s remember where this started: China was “dumping” too much steel and aluminum on world markets, depressing prices.

There have been other poorly reasoned moves, and I will get to some of those, but let me start by saying that I have tried to give President Trump the benefit of the doubt since he took office. Every president deserves that.

So, I tried. When I could, anyway.

It didn’t start well. On his first full weekday as president, Trump withdrew the United States from the Trans-Pacific Partnership and I just couldn’t find anything good to say. To date, that remains  the worst, most consequential policy decision he has made.

Some of his critics will argue that pulling out of the essentially voluntary Paris climate accords was worse, leaving the United States as the world’s only country not part of it, while still others will point to the more recent decision to walk away from the Iran peace accords, even though Iran was in compliance. A few might nominate the decision to move the U.S. embassy from Tel Aviv to Jerusalem.

Trust me, it’s the T.P.P. decision. That was an important free trade agreement seven years in the making, one that sought to dilute rising Chinese influence. All the other nations that were part of the negotiations have subsequently signed it.

But there have been instances where I have been able to give the president the benefit of the doubt, even as fellow proponents of increased trade have not.

When Trump said he wanted to renegotiate the North America Free Trade Agreement, after calling NAFTA the worst treaty ever during the campaign and subsequently vowing to walk away from it on numerous occasions, the approach was and remains un-presidential but I didn’t think it was a terrible idea to take another look at a treaty that had been in place for a quarter century. A lot has changed since the first President Bush negotiated the treaty and his successor, President Clinton, pushed it across the finish line with the help of Republicans in Congress. So, I reasoned, why not update it?

Today, as the NAFTA negotiations appear stalled due largely to one or two largely unpalatable U.S. positions, Trump announced that tariffs on steel and aluminum go in place against Canada and Mexico.

On China, when he complained about intellectual property issues and the nation’s continued reliance on the “developing nation” crutch, I had no objections. Reasonable complaints, I thought. Yesterday, the White House announced, as previously threatened, that it will be placing 25% tariffs on at least $50 billion in Chinese imports. The stated purpose is to reduce the U.S. trade deficit, rather than push toward protecting intellectual property rights.

When he got into a verbal scuffle with Canada’s president, Justin Trudeau, over whether the United States had a trade deficit with Canada or not, I took Trump’s side even though he somewhat inexplicably chose to admit he didn’t really know. Although the slings and arrows directed northward have been more benign than to most U.S. allies, Trump included Canada in the steel and aluminium tariffs. I don’t see that helping in the NAFTA negotiations.

When he questioned why automobile tariffs between the United States and Germany are not equal, I thought it a reasonable question (though wondered if the answer is more complex). Germany, our No. 3 market for auto exports thanks to Mercedes manufacturing in Alabama and BMW manufacturing in South Carolina, is now subject to the steel and aluminum tariffs as are the rest of the European Union nations. Those cars, as they rely on foreign steel but made by American workers, will now be more expensive.

Egged on by a trade triumvirate that is as decidedly opposed to trade as any in the post-World War II era, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and Director of Trade Policy Robert Navarro, Trump is now lighting a match to the world order that has, while imperfect, done more to improve the human condition more rapidly, than at any time in history. Remember, the first two are long-time advocates of defending the U.S. steel industry from foreign competition through government intervention while the latter is an avowed and unapologetic China basher.

One of the president’s few cordial relationships with a head of state to date has been with Japanese Prime Minister Shinzo Abe. The steel and aluminum tariffs against Japan went into effect today.

W e are increasingly isolated as a nation by a president who came to politics as a builder and developer and now does little more than demolish. He has no plans to build. He talked of being opposed to multilateral deals and preferring bilateral treaties but there are no negotiations underway. Think I’m too harsh? Quick, name the United States’ strongest ally. Sure, Israel’s Benjamin Netanyahu is often in agreement with the president but the roster gets pretty thin from there.

If this isn’t a trade war, it’s pretty close to one. And if it is, there’s no one on our side. I wish I could be more optimistic.

https://www.forbes.com/sites/kenroberts/2018/05/31/another-sad-day-for-u-s-trade-relations-with-the-world/#7b47b04b501c

Agree? Disagree? Email me. Or follow me here or on LinkedIn or Twitter, or watch my “Trade Matters” series on WorldCity’s YouTube channel

US to impose steel, aluminum tariffs on EU, Canada, Mexico

May 31, 2018

The United States said Thursday it will impose harsh tariffs on steel and aluminum imports from the European Union, Canada, Mexico at midnight (0400 GMT Friday) — another move sure to anger Washington’s trading partners.

The announcement by Commerce Secretary Wilbur Ross was sure to cast a long shadow over a meeting of finance ministers from the world’s Group of Seven top economies that opens later in the day in Canada.

© AFP/File / by Heather SCOTT, with Jurgen Hecker in Paris | US Commerce Secretary Wilbur Ross announced the imposition of steel and aluminum tariffs on Thursday

Ross said talks with the EU had failed to reach a satisfactory agreement to convince Washington to continue the exemption from the tariffs imposed in March.

Meanwhile, negotiations with Canada and Mexico to revise the North American Free Trade Agreement are “taking longer than we had hoped” and there is no “precise date” for concluding them, so their exemption also will be removed, Ross told reporters.

The announcement was confirmed by presidential proclamation shortly after Ross addressed reporters.

Despite weeks of talks with his EU counterparts, Ross said the US was not willing to meet the European demand that the EU be “exempted permanently and unconditionally from these tariffs.”

“We had discussions with the European Commission and while we made some progress, they also did not get to the point where it was warranted either to continue the temporary exemption or have a permanent exemption,” Ross said.

Ross downplayed the threats of retaliation from those countries, but said talks can continue even amid the dispute to try to find a solution.

And President Donald Trump has the authority to alter the tariffs or impose quotas or “do anything he wishes at any point” — allowing “potential flexibility” to resolve the issue.

Trump imposed the tariffs of 25 percent on steel and 10 percent on aluminum using a national security justification, which Ross said encompasses a broad array of economic issues.

South Korea negotiated a steel quota, while Argentina, Australia and Brazil have arranged for “limitations on the volume they can ship to the US in lieu of tariffs,” Ross said.

“We believe that this combined package achieves the original objectives we set out, which was to constrict imports to a level to allow those industries that operate domestically to do so on a self-sustaining basis going forward.”

– Not a western –

French Economy Minister Bruno Le Maire has warned before the announcement that the EU would take “all necessary measures” if the US imposed the tariffs.

“World trade is not a gunfight at the O.K. Corral,” Le Maire quipped, referring to a 1957 western movie

“It’s not everyone attacking the other and we see who remains standing at the end,” he said, declaring that the stiff taxes would be “unjustified, unjustifiable and dangerous”.

German Chancellor Angela Merkel said the EU would respond in a “firm and united” manner to the tariffs.

“We want to be exempt from these tariffs” which were “not compatible” with World Trade Organization (WTO) rules, Merkel told a press conference with Portuguese premier Antonio Costa in Lisbon.

by Heather SCOTT, with Jurgen Hecker in Paris
.
AFP

China lowers tariffs, rejects US trade war escalation — Afraid of Trump?

May 31, 2018

China said Thursday it wanted to avoid an escalation of trade tensions with the United States, as the two sides held new talks and Beijing decided to lower some tariffs.

The overture came two days after the White House said its planned trade sanctions against China were still in the works despite the announcement of a truce following a previous round of talks earlier in May.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

© AFP/File | China has said it wants to avoid an escalation of trade tensions with the United States

A 50-strong US delegation arrived in Beijing on Wednesday for follow-up meetings, Chinese commerce ministry spokesman Gao Feng said, without proving more details.

“We hope that China and US economic and trade cooperation can benefit people in both countries, and we are not willing to see trade frictions escalate,” Gao told a regular press briefing.

The delegation is laying the groundwork for a weekend visit by US Commerce Secretary Wilbur Ross.

The Trump administration said Tuesday that US sanctions announced in March — including restrictions on Chinese investment, export controls and 25 percent tariffs on as much as $50 billion in Chinese tech exports — remain under development.

Gao slammed the proposal, saying US measures to implement investment restrictions and export controls against China “do not conform with the basic principles and spirits of the WTO (World Trade Organization)”.

“China will carefully evaluate the US measures and relevant impact and retain its rights to adopt relative measures.”

Separately, the Chinese government announced in a statement late Wednesday that it would further cut import tariffs on daily consumer goods from July 1.

The average tariff on clothing, shoes and hats, kitchenware, and sports and fitness supplies will be reduced from 15.9 percent to 7.1 percent.

The rate for home appliances such as washing machines and refrigerators will be lowered from 20.5 percent to eight percent.

– ‘No forced tech transfers’ –

Gao said China will also publish a “negative list” of foreign investment by June 30 to ease restrictions in fields including energy, resources, infrastructure and transportation. A negative list includes all the industries with foreign investment restrictions.

Beijing previously said it would relax restrictions on foreign investment in automobiles, shipbuilding and aircraft firms.

At a meeting Wednesday chaired by Premier Li Keqiang, the State Council — or cabinet — also decided that China would widen market access through more foreign investor-friendly measures, according to the official Xinhua news agency.

“We should raise our innovation capacity in the new round of opening up and see that all intellectual property be fully protected,” Li said.

“No forced technology transfer will ever be imposed on foreign-invested enterprises and IPR (intellectual property rights) infringements will be penalised to the full extent of the law.”

Donald Trump has accused China of forcing US firms to hand over their industrial secrets to Chinese firms in order to do business in the country, a charge that Beijing has rejected.

In other measures announced by Xinhua, overseas traders will be encouraged to participate in crude oil and iron ore futures trading.

Severe measures will be taken to punish infringements, counterfeiting, commercial secret violators and trademark squatters.

AFP

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China Cuts Tariffs on Wide Range of Consumer Goods From July

 Updated on 

China will reduce tariffs on a wide range of consumer goods from July 1, the State Council said in a statement.

The tariff cuts will apply to products including clothes, washing machines and makeup. The reduction was decided at the state council on Wednesday which was chaired by Premier Li Keqiang.

The announcement came after President Donald Trump decided to move ahead with additional tariffs on $50 billion of imports from China, a move that could potentially derail the truce reached last week between the world’s two biggest economies. China hit back at that, with a foreign ministry spokeswoman saying on Wednesday that China would respond accordingly if the U.S. insisted on unilateral measures.

Read the rest:

https://www.bloomberg.com/news/articles/2018-05-30/china-cuts-tariffs-on-wide-range-of-consumer-goods-from-july-1

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