Global markets on edge as Trump threatens duties on all Chinese imports

Dwayne Harmon
September 8, 2018

The president's comments came after Apple warned this week that Trump's proposed tariffs on $200 billion worth of Chinese goods would affect a host of its products, including Apple Watch and Apple AirPods.

Members of the public had until Thursday to comment on the administration's plan to slap tariffs on US$200 billion of Chinese goods, ranging from bicycles and baseball gloves to digital cameras, paving the way for Trump to announce the tariffs as early as Friday. "The notion that the president is going to add an extra $267 billion worth of tariffs is grossly irresponsible and possibly illegal", said Jose Castaneda, spokesman for the Information Technology Industry Council, which argues that the tariffs are not permitted under USA trade law.

But he told reporters traveling with him to Fargo, North Dakota that "behind that, there's another $267 billion ready to go on short notice if I want".

"That changes the equation", he added.

The US imported $505 billion of goods from China last year and the figure is expected to rise this year.

Such a move would subject virtually all US imports from China to new duties.

But the higher cost of wages in the United States could offset the benefits Apple might gain by avoiding tariffs affecting its products manufactured in China.

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White House Economic advisor Larry Kudlow told CNBC that talks between the US and China were ongoing.

Computer and phone makers are involved in a global supply chain that includes Chinese manufacturing, and that can not be easily excluded without harm to USA companies, Intel said in a letter to the trade representative. Among the equipment hit were a number of components and devices used by United States tech firms, including chips and networking gear produced in Chinese factories.

For the Trump administration, Friday began with sunny signs for the labor market before Trump's hawkish trade-war rhetoric clouded the outlook. In January, the company also announced its "direct contribution" to the US economy through investments and other spending would exceed $350 billion over the next five years, while it would establish a new Apple campus to house technical support for customers.

"I don't think this magnitude of tariffs has been priced into the markets", Lara Rhame, chief US economist at FS Investments, told Bloomberg Television in an interview.

"Our concern with these tariffs is that the USA will be hardest hit, and that will result in lower United States growth and competitiveness and higher prices for U.S. consumers", Apple said in the letter. The company said on its website that it spent over $50 billion for goods purchased from US suppliers past year.

"These are basically fiscal subsidies to offset the negative impacts of the tariffs", said Li Yishuang, a Shanghai-based economist at China Securities Finance Co.

Mr Trump imposed customs duties of up to 25 per cent on US$34 billion worth of Chinese goods in July, and on another US$16 billion in August, triggering swift tit-for-tat responses from Beijing.

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