Trade War: US rushes to ready new China tariffs…. China may be willing to accept an economic downturn to hurt Trump and win a better trade deal

www.bloomberg.com/news/articles/2019-08-08/u-s-rushes-to-ready-new-china-tariffs-as-companies-fret-damage?srnd=premium

The Trump administration is rushing to finalize a list of $300 billion in Chinese imports it plans to hit with tariffs in a few weeks’ time, as U.S. companies make a last-ditch appeal to be spared from the latest round of duties.

President Donald Trump’s announcement last week on adding a 10% tariff as of Sept. 1 to virtually every Chinese import that’s not yet subject to punitive duties took U.S. Trade Representative Robert Lighthizer by surprise, people familiar with the discussions said. Lighthizer and his staff are now under pressure to revise an initial list targeting more than 3,800 Chinese product lines based on issues raised during a public comment period and hearings.

The USTR is planning to publish the final list this week or early next, the people said. In that meantime, companies are making a last-ditch attempt at convincing the Trump administration not to impose duties or to drop items they import from the tariff list.

In a meeting shortly before the president announced the new duties, Lighthizer argued against the new tariffs. He instead urged patience to allow more time for a tariff increase in June to 25% from 10% on an earlier batch of $200 billion worth of Chinese imports to inflict pain on the Chinese economy, the people said.

A USTR spokesman disputed that account, and said the agency was following the same legal process as it had in previous tariff rounds. Trump decides when the tariffs will go into effect and USTR will publish the final list before the effective date, the spokesman said.

“Companies don’t plan by tweet,” Jon Gold, of the National Retail Federation, said. “These are all contracts that are already executed and cargo is on the water.”

After Trump and his Chinese counterpart Xi Jinping agreed on yet another tariff truce in late June, businesses didn’t expect another escalation this soon and felt like they had more time to plan, Gold added. Companies and trade associations are still trying to weigh in with the administration to make their case and potentially get their products taken off the list.

White House economic adviser Larry Kudlow this week signaled the tariffs could be called off before Sept. 1 if Beijing shows goodwill on buying American agriculture goods and getting back to the negotiating table.

“The president and our team is planning for a Chinese visit in September,” Kudlow said Tuesday on CNBC. “Movement toward a good deal would be very positive and might change the tariff situation. But then again, it might not.”

It’s not clear if businesses are able to submit requests for product exclusions once the duties are imposed. For previous lists, such an option was only available once the tariff rate was bumped up to 25%. It’s also not clear whether the Sept. 1 date applies to the date when the item arrives in the U.S. or when it leaves China — a critical question for importers because of the amount of product that is already on the water traveling to America.

Of the almost 13,750 exclusion requests submitted for the initial tariffs imposed last year on $50 billion in goods, only 23% have been approved as of Aug. 2. About 60% were rejected and the rest are still being revised, government data show. Companies can file for exclusions in the last round of tariffs on $200 billion of products until Sept. 30.

www.cnbc.com/2019/08/07/china-may-be-willing-to-accept-an-economic-downturn-to-hurt-trump-and-win-a-better-trade-deal.html

“Many investors have expressed the view that China is prepared to accept an economic downturn (and thus a global economic downturn) to prevent President Trump’s reelection,” Naka Matsuzawa, Nomura’s chief rates strategist in Tokyo, said in a note Wednesday following meetings with Asian clients.

www.scmp.com/business/commodities/article/3021947/chinas-rare-earth-producers-say-they-are-ready-weaponise-their

  • The Association of China Rare Earth Industry, which represents almost 300 miners, processors and manufacturers, issued a statement yesterday, citing an August 5 meeting
  • “US consumers must shoulder the cost from US-imposed tariffs,” the association said

AC