World_news China hits U.S. with tariffs on $75 billion worth of goods, reinstates auto levies, state media report – The Washington Post

World_news

U.S. stock futures nose-dived Friday after China announced retaliatory tariffs on $75 billion in U.S. goods and reinstated levies on American auto products.

The levies range from 5 to 10 percent and take effect Sept. 1 and Dec. 15 — the same dates President Trump’s latest tariffs on $300 billion in Chinese goods are slated to kick in — the Chinese finance ministry said in a statement.

A 25 percent tariff on automobiles and a 5 percent levy on auto parts take hold Dec. 15.

The month a shadow fell on Trump’s economy

“China’s imposition of tariffs is a forced response to the unilateralism and trade protectionism of the United States,” said the Communist Party-run Global Times. The outlet said it hoped the trade conflict would be resolved “on the premise of mutual respect and equality and trustworthiness in words and deeds.”

Dow Jones industrial average futures, which had been predicting a 100-point gain at the market open, sank immediately after the announcement and now point to a 150-point loss. auto stocks also turned negative in premarket trading, with General Motors off 1.7 percent, Ford Motor Co. sliding 1.9 percent and Fiat Chrysler down 1.1 percent.

Based on what I know, China will take further countermeasures in response to US tariffs on $300 billion Chinese goods. Beijing will soon unveil a plan of imposing retaliatory tariffs on certain US products. China has ammunition to fight back. The US side will feel the pain.

— Hu Xijin 胡锡进 (@HuXijin_GT) August 23, 2019

“China has ammunition to fight back,” Hu Xijin, the editor in chief of the Global Times, tweeted Friday. “The U.S. side will feel the pain.”

China’s retaliation marked yet another escalation in the trade war that has hogtied two of the world’s most powerful economic engines for more than a year, and the conflict is taking a toll across the globe. China’s economic growth has slowed to its lowest rate in 27 years, as factory output declines and unemployment rises. Meanwhile, central bank leaders in Europe, Asia and Australia have cut interest rates in recent weeks, attributing the need for economic stimulus to the fallout from the trade war.

In the U.S., economists have become alarmed amid the burgeoning recession signals despite low unemployment and strong consumer spending. The manufacturing sector contracted for the first time in a decade. The U.S. manufacturing purchasing managers’ index fell to 49.9 in August from 50.4 in July, according to IHS Markit. It is the first time the closely watched indicator has fallen below 50 since September 2009.

Sales of U.S. exports also decreased at the fastest pace since August 2009. When exports fall, manufacturers typically react by reducing inventories and cutting production, which could spur job cuts. Air freight volumes also fell nearly 5 percent in June, marking the eighth consecutive month of decline. Freight airlines cited the trade disputes between the U.S. and China as a prime reason for slumping demand.

And last week, for the first time since the run-up to the Great Recession, the yields — or returns — on short-term U.S. bonds eclipsed those of long-term bonds. This phenomenon, which suggests investor faith in the economy is faltering, has preceded every recession in the past 50 years.

Despite signs of a homegrown slowdown, Trump — at least publicly — maintains that the U.S. is immune to the weakening economic trends rattling other countries. In tweets Friday morning before China’s tariffs announcement, Trump blamed the media and political foes for recession fears that have gripped the U.S. for the past week.

..willing to lose their wealth, or a big part of it, just for the possibility of winning the Election. But it won’t work because I always find a way to win, especially for the people! The greatest political movement in the history of our Country will have another big win in 2020!

— Donald J. Trump (@realDonaldTrump) August 23, 2019

“The Economy is strong and good, whereas the rest of the world is not doing so well,” Trump tweeted Friday morning, before China’s retaliation was announced.

But even as he has touted the strength of the U.S. economy, Trump has repeatedly attacked Federal Reserve Chair Jerome H. Powell for not providing enough stimulus through rate cuts, despite the fact that the central bank cut rates in July for the first time since the financial crisis. Investors are awaiting Powell’s comments at the Fed’s annual economic symposium Friday morning, looking for clues to the Fed’s next moves ahead of its mid-September meeting.

“Trump has been publicly berating the Fed Chair for the last year but has really stepped up his attacks in recent months as the economy has weakened, recession warnings have started flashing red and the need for someone else to blame has intensified,” Craig Erlam, an analyst with OANDA, wrote in a note to investors Friday. “The trade war is taking its toll and heading into an election year, Trump does not want fingers pointing at him.”

In private, Trump and his administration have been scrambling for means to avert an economic downturn, The Post has reported. Ideas that have been discussed include imposing a currency transaction tax that could weaken the dollar and make U.S. exports more competitive; creating a rotation among the Federal Reserve governors that would make it easier to check the power of Chair Jerome H. Powell, whom Trump has blamed for not doing all he can to increase growth; and pushing to lower the corporate tax rate to 15 percent in an effort to spur more investment. Some, if not all, of these steps would require congressional approval.

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