Published: Thu, July 12, 2018
People | By Leon Thompson

The U.S. Energy Industry Cant Afford A Trade War

The U.S. Energy Industry Cant Afford A Trade War

This would be the third round of tariffs on Chinese goods imposed by the Trump administration and comes shortly after a tariff of 25% went into effect against $34 billion of Chinese goods. "We believe the USA measures interfere with economic globalization and damage the world economic order".

US President Donald Trump has accused China of unfair trade practices that give its firms an advantage, while hobbling American companies and creating an outsized trade deficit for the United States.

The USTR, the federal agency that oversees global trade policy and negotiations, said it was responding to Beijing's decision to retaliate instead of changing its policies.

US Trade Representative Robert Lighthizer said China's retaliatory tariffs were "without any worldwide legal basis or justification". "It has to resolutely fight back while taking proper measures to help minimise the cost to domestic enterprises and further open up its economy to global investors", it said.

"Unfortunately, China has not changed its behavior - behavior that puts the future of the US economy at risk".

A survey by the American Chamber of Commerce in Shanghai found that most USA businesses operating in China oppose the use of tariffs in retaliation for the challenges they face, from an uneven playing field to poor protection of intellectual property rights. "There is no justification for such action".

The planned new tariffs follow the 25 percent imposed on $34 billion in Chinese products, which Beijing responded to by hitting the same amount of US imports.

Head of USA equity strategy at JP Morgan, Dubravko Lakos-Bujas, said: "Despite trade headlines, S&P 500 companies should deliver robust earnings on above-trend revenue growth and sharply higher margins".

US Senate Finance Committee Chairman Orrin Hatch described the move was "reckless".

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'Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families, ' trade lawyer Scott Lincicome said. They warned tariffs on imports raise consumer prices and expose United States farmers and manufacturers to retaliation.

It stems from Washington's belief that Beijing steals or pressures companies to hand over technology and worries that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership. In fact, China is America's second-largest crude oil customer after Canada and is also one of the biggest importers of USA propane and liquefied natural gas (LNG).

"Tariffs on $US200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families", said Scott Lincicome, a trade lawyer and senior policy analyst for the group Republicans Fighting Tariffs.

Louis Kuijs, Hong Kong-based Head of Asia Economics at Oxford Economics, said China's policy response is likely to be limited for now.

According to its detailed notice on the process to come, USTR aims to conduct hearings in late August, which means that the earliest possible implementation date for the additional $200 billion in tariffs can be in September.

The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years.

U.S. officials released a list of 6,031 Chinese product lines the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. But Trump hasn't backed down, arguing that China's unfair trading practices are hurting American workers.

Trump had threatened earlier that he would impose additional tariffs if Beijing retaliated with countermeasures.

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