Trump’s China tariffs massively backfire as trade deficit smashes record high

Trump’s China tariffs massively backfire as trade deficit smashes record high

The trade war entered a new level in September, with the U.S. imposing 10 per cent tariffs on US$200 billion worth of goods imported from China, effective as of September 24, which could escalate to 25 per cent in January 2019, while China fought back with tiered tariffs from 5 to 10 per cent on US$60 billion of USA goods. The Shanghai Composite index advanced 0.9 per cent to 2,606.91.

Concerns have been raised that China, the largest foreign holder of U.S. Treasurys, might start dumping its holdings as a way to pressure the United States in the trade dispute.

He also blamed previous US presidents for allowing China to pursue unfair trade practices and said he had to tell Beijing, "It's over".

Reports that Mnuchin has advised against labeling China a currency manipulator - a status that could trigger penalties - were also seen as easing tensions.

Trump said the Chinese want to negotiate but he does not believe they are ready and he told them so.

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Despite a worsening tariff war, China's trade surplus with the United States has widened to a record $34.1bn in September.

For the first nine months, crude oil imports into China rose 6 percent on the year to 8.98 million bpd, or a total of 336 million tons, which is in line with projections about Chinese oil demand, despite worry that demand would slow down this year because of a domestic fuel glut. That's significantly higher than the $196 billion recorded between January and September past year.

Lowered manufacturing output reported at the end of September in China indicates that the tariffs may be starting to bite Beijing. Export numbers have been buoyed by producers rushing to fill orders before American tariffs rose.

Customs data on Friday showed growth in Chinese imports of US goods decelerated to 9 percent over a year earlier.

The yuan has fallen for weeks against the USA dollar, dropping nine percent in the past six months, which mitigates the rise in the price of Chinese goods caused by punitive U.S. tariffs. That prompted suggestions Beijing might weaken the exchange rate to help exporters, but that might hurt China's economy by encouraging an outflow of capital. The central bank has tightened controls on currency trading to prevent further declines.

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