China's economy was losing steam even ahead of Trump's new tariffs

China's economy was losing steam even ahead of Trump's new tariffs

Trump's Treasury secretary said the president "is determined that we have free and fair trade". And we'll handle it now, ' he said on Tuesday morning.

"Both sides have the incentive to act half-crazy and unpredictable before that in order to cut a better deal", they said.

"We had a deal that was very close and then they broke it".

"Ultimately, nobody wins a trade war unless there is an agreement at the end", said Senate Majority Leader Mitch McConnell, R-Ky.

But the US says China is trying to meet its aspirations by stealing trade secrets, coercing technology transfers, subsidizing its own firms and burying in red tape foreign companies that want to compete in the Chinese market.

"Make your product at home in the US and there is no tariff", Trump countered on Tuesday. It doesn't help that Trump is pressuring China at a time when its economy is already softening for other reasons.

The slightly more optimistic comments came after both sides ramped up their trade war, with China announcing details of new tariffs against USA imports on Monday, following the United States' move last week to target Chinese imports.

U.S. President Donald Trump rolled out 25 per cent tariffs last week, leaving Chinese producers reeling. 2019 gross domestic product growth will be lowered by 0.3 percentage point by the rise in USA tariffs on US$200 billion of imports from China. The administration had already put in place a $12 billion bailout program a year ago for farmers as a result of the ongoing trade war with China. All of those are at the heart of USA complaints about doing business with China. With the new tariffs in place in May, we can expect May's numbers to be worse.

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Trump has said he would meet with Chinese President Xi Jinping next month, with focus now turning to an upcoming G20 meeting. -China trade war stalled last week, the United States raised the pressure by increasing tariffs to 25% from 10% on a previous, $200 billion list of Chinese imports.

Such higher tariffs would hit an array of Chinese-produced consumer goods - clothing, children's toys, sports equipment, shoes and consumer electronics - that are widely bought by Americans. That would drive down the US stock market, and drag down stock markets around the world.

That's because if the United States and China continue to escalate their trade sanctions, China may start putting more restrictions on US corporations doing business in China, such as General Motors or Boeing.

Authorities have for years been attempting to transition the world's No. 2 economy from being reliant on state investment and exports to a more stable one driven by China's huge army of consumers, with the tariffs standoff reinforcing the need for such a change.

Last year, the US began imposing tariffs to pressure China to drop the aggressive tactics. The involvement of the control group for USA retail sales, which feeds into the GDP accounting, at a flat month-on-month (MoM) result against the 0.4% consensus however marks a weak first Q2 reading to note. S&P 500, American stock market index, shifted to 3.8 percent while the Chinese CSI 300, sinked to 6.9 percent.

China's finance ministry released a statement: "China's adjustment on additional tariffs is a response to USA unilateralism and protectionism". Trump associates and advisors are resolute in their belief that he will not back down in this face-off with China, which they describe as a life-and-death issue for the United States. "As for how they are pursued, I think that hinges upon further consultations between the two sides", Chinese Foreign Ministry spokesman Geng Shuang told a daily news briefing on Tuesday, without giving details.

Ian Bremmer, president of political risk consultancy Eurasia Group and a CBS News senior global affairs contributor, thinks taking a strong line with China is necessary to re-set trade relations between the countries.

The US Trade Representative's office said it planned to hold a public hearing next month on the possibility of imposing duties of up to 25 per cent on a further $US300 billion worth of imports from China. But, in the meantime, a lot of money is being made by the United States, and a lot of strength is being shown, ' he claimed.

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