US levies on European and Chinese goods may also break WTO rules, says German leader
The war of words over President Donald Trump’s threat to impose wide-ranging tariffs on imports from China and the European Union intensified on Friday after the German chancellor, Angela Merkel, said the levies threatened the incomes of workers across the world.
Merkel described possible US tariffs on imported cars as a breach of World Trade Organization rules and “a real threat to the prosperity of many in the world” as Trump went on US television to say that he was ready to expand his roster of tariffs on Beijing to $500bn, covering almost every product imported to the US from China.
Alex Orr and Anne Loveday say the UK will leg behind, while John Mills says US negotiators will hold the whip hand
As the Brexit divisions are laid bare in the House of Commons, with the Conservative party split apart, there was more than a little irony that the EU and Japan signed a huge trade deal this week that cuts or eliminates tariffs on nearly all goods (Report, 18 July).
The agreement covers 600 million people and almost a third of the global economy. It will remove tariffs on European exports such as cheese and wine, and Japanese carmakers and electronics firms will face fewer barriers in the EU.
The economy is being buffeted by growing concerns over the US president’s trade war
How does the current global economic outlook compare to that of a year ago? In 2017, the world economy was undergoing a synchronised expansion, with growth accelerating both in advanced economies and emerging markets. Moreover, despite stronger growth, inflation was tame – if not falling – even in economies such as the United States, where goods and labour markets were tightening.
Stronger growth with inflation still below target allowed unconventional monetary policies either to remain in full force, as in the eurozone and Japan, or to be rolled back very gradually, as in the US. The combination of strong growth, low inflation and easy money implied that market volatility was low. And with the yields on government bonds also very low, investors’ animal spirits were running high, boosting the price of many risky assets.
Related: IMF warns Trump trade war could cost global economy $430bn
The combination of a stronger dollar, higher interest rates and less liquidity does not bode well for emerging markets
Move comes less than a week after new call by US president escalated trade dispute
China has filed a complaint against the US at the World Trade Organisation over Donald Trump’s threats to place tariffs on an additional $200bn worth of Chinese goods.
The one-sentence announcement on Monday, from China’s ministry of commerce, comes less than a week after the US president called for a second round of tariffs on China, in retaliation for Chinese tariffs placed on American goods.
Related: China files WTO challenge over US tariffs, as its economy slows – business live
June figures risk further escalation of bitter trade dispute with Washington
China’s trade surplus with the US widened to a record in June, risking further escalation of a a bitter trade dispute with Washington.
Related: Global investors rattled as all-out trade war moves step closer
Beijing vows countermeasures if Trump administration acts on latest threat of tariffs
Global investors have been rattled after a threat by the Trump administration to impose 10% duties on $200bn (£151bn) of imports prompted protests from Beijing and brought an all-out trade war a step closer.
Stock markets headed lower in the US, Asia and Europe on Wednesday as the US warned that it would press ahead with further tariffs and China promised to “fight back as usual” with “firm and forceful measures” if they were enacted.
Related: From eels to anvils: Trump’s new China tariffs revealed
Donald Trump’s latest round of import restrictions affect a wide range of items including human hair and lithographs
The latest round of US tariffs imposed on $200bn (£151bn) of Chinese imports by Donald Trump will affect 6,000 more products, including everyday consumer goods such as deodorants, shampoo and food.
The first wave of US tariffs on $34bn of Chinese goods, imposed last Friday, mainly affected aerospace, IT, and medical equipment. The second tranche is much broader, including metals and other commodities but also some unusual items, including conveyor belts and portable forges.
While it has sizeable risks, the US battle with China could open the door to a new era
The latest round of tit-for-tat tariffs by the United States and China has intensified the global debate about whether the world is facing a mere trade skirmish or heading rapidly toward a full-blown trade war. But what is really at stake may be even more fundamental. Either accidentally or by design, Donald Trump’s administration may have paved the way for a “Reagan moment” for the international trade regime.
In the 1980s, Ronald Reagan initiated a military spending race with the Soviet Union that ended up altering the global balance of power in ways that affected many countries worldwide. Today, Trump has launched a tariff race with China, an economic superpower, perhaps with similarly far-reaching potential consequences. Like under Reagan, the US is better placed to win the current competition with China – but the risks are sizeable.
Related: Trump’s trade war: what is it and which products are affected?
The Trump administration will need to avoid actually pushing other countries (especially China) too hard too soon
Related: Why America’s cheese capital is at the center of Trump’s trade war