Trump Warns Xi: Trade War With China Begins Monday

As if there weren't enough geopolitical and social stress points in the world to fill a lifetime of "sleepy, vacationy" Augusts, late on Friday night President Trump spoke to Chinese President Xi Jinping and told him that he's preparing to order an investigation into Chinese trade practices next week, according to NBC. Politico confirms that Trump is ready to launch a new trade crackdown on China next week, citing an administration official, a step that Trump delayed two weeks ago under the guidance of his new Chief of Staff Gen. Kelly, but now appears imminent. It is also an escalation which most analysts agree will launch a trade war between Washington and Beijing.

As Politico details, Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it's unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974. The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China's unfair trade policies.

As we discussed two weeks ago, Trump had planned to launch the trade investigation more than a week ago, but he delayed the move in favor of securing China's support for expanded U.N. sanctions against North Korea, the senior administration official said.

The pending announcement also comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea. Still, Trump has delayed trade action before, amid pressure from business groups and major trading partners:

Two Commerce Department reports examining whether to restrict steel and aluminum imports on national security grounds were expected by the end of June but have been bottled up in an internal review. Trading partners raised threats of retaliation and domestic steel users complained of being hurt by price increases and restricted supply.

The trade investigation will immediately strain relations between the U.S. and China as the two countries wrestle with the unpredictable situation over North Korea.  Should Trump follow through, the move will lay the groundwork for Trump to impose tariffs against Chinese imports, which will mark a significant escalation in his efforts to reshape the trade relationship between the world's two largest economies. In other words, even if there is now conventional war announced with either North Korea or Venezuela, Trump's next step is to launch a trade war against China.

"The United States government can, and does, work with countries to address serious concerns such as North Korea while also pursuing measures to address economic concerns, such as the theft of U.S. intellectual property," a U.S. National Security Council official said.

It wasn't immediately clear how China would react to the move.

When reports of the potential trade investigation first emerged more than a week ago, China's Commerce Ministry stressed the importance of U.S.-China trade ties and of resolving differences "through dialogue and consultation."

 

"We would like to emphasize that the Chinese government has always attached importance to intellectual property protection," a spokesman said. "The results are there for all to see."

Trump, who has been residing at his golf club in Bedminster, New Jersey, for the past week, plans to return to Washington on Monday to officially announce the trade investigation. The decision will not only take action against alleged Chinese violations of U.S. companies' intellectual property rights, but could also be perceived as an attempt by the U.S. government to crank up the pressure on Beijing to rein in North Korea. "I think China can do a lot more," Trump told reporters on Thursday. "And I think China will do a lot more."

As CNN adds, the trade investigation is expected to be only one part of a multi-pronged push by the Trump administration to counter perceived Chinese trade abuses.  The administration has been eyeing other moves to rebalance the U.S.-China trading relationship. But analysts have cautioned that Trump faces a huge challenge in his desire to significantly reduce the U.S. trade deficit with China, which last year stood at more than $300 billion. "Protection measures against some specific items, such as steel and aluminum, may gain political favors, but are not likely to be of much help to rebalance trade," economists at the Institute of International Finance wrote in a research note this week.

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Meanwhile, as we reported previously, China state media signaled the nation would hit back immediately against any trade measures, as it has done in past episodes. This time around, the need to project strength domestically is compounded by the looming twice-a-decade leadership reshuffle that may further entrench President Xi Jinping’s power.

Chinese officials have mulled stemming U.S. imports should retaliation be necessary. Under a draft plan, soybeans have been singled out as the top product that can be dialed back, according to people familiar with the matter. Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction, the people said.

Still, Trump's offensive comes at a very sensitive time for Beijing: just weeks ahead of the 19th Party Congress, when Xi Jinping wants everything in his economy to be perfect. "Ahead of the 19th Party Congress, the last thing that China will want is a trade war," said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. "It is also important that Beijing does not look weak in this context. As such, expect a cautious, proportional response."

Of course, ultimately the big question - as Bloomberg puts it - is whether the Trump administration is willing to risk a trade war as it ups the ante. The IMF warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. The problem, for both the US and China, is that as Trump gets increasingly more focused on distracting from his numerous domestic scandals, he is likely to take ever more drastic action in the foreign arena, whether that means "hot war" with North Korea, or trade war with China.

“So far, it’s all been posturing, with little action,”’ said Scott Kennedy, a U.S.-China expert at the Center for Strategic and International Studies in Washington. “Pressure is building to do something, so the U.S. doesn’t look like a complete paper tiger.”

And while we await the formal announcement on Monday and China's retaliation, below again is a breakdown of the biggest US state winners and losers if and when trade war with China breaks out, from "Winners And Losers When Trade War Breaks Out Between The US And China"

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Who stands to lose - and win - if the U.S. takes aim at the unbalanced trade relationship with China? With total bilateral trade of more than half a trillion dollars a year, the list of potential losers is very long as Bloomberg analyzed recently. The most notable examples include:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total -- below Vietnam.

And while conventional wisdom is that the US has a chronic trade deficit with China - it does - the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.

U.S. Trade Balance With China by Product

How about geographically?

It may come as a surprise that on a state-by-state basis, eight U.S. states are running surpluses with China, six of which supported Trump in last year’s presidential election, including West Virginia. In 2016, Louisiana registered the largest surplus, at 2.9% of the state’s GDP. Louisiana’s exports to China are likely inflated given that 60% of U.S. soybean exports are shipped through the Gulf coast. Washington state was second at 1.6% of GDP, largely due to aerospace exports.

Tennessee maintains the largest trade deficit with China at 6.5% of GDP, meaning tariff-induced increases in the price of imports could have the biggest impact on this state.

The biggest losers? Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.

For the sake of brevity, we will not discuss another, more troubling, aspect of conventional wisdom, namely that trade wars almost inevitably lead to real wars. Aside for the US military industrial complex, there are no winners there.

Comments

Troll Magnet skbull44 Sat, 08/12/2017 - 10:26 Permalink

Does it even matter at this point? We need to start rounding up illegal Chinese and kick them outta here. Then we need to revoke all green cards and citizenship awarded to Chinese in the last 20 years.

Oh yeah. Chinese firms get up to 20% rebate from their commie government for every piece of toxic shit they export. That's one of the main sources of what's turned this country into a giant fucking Wal-Mart on Black Friday. Fuck China. We'd be better off without them.

In reply to by skbull44

Grimaldus Justin Case Sat, 08/12/2017 - 11:41 Permalink

Like I said, war is not needed. Duh.All of America's interventions in other sovereign nations have been driven by the progressive criminals infesting the FEDGOV. Like you.True founding father constitutional conservatives do not hold intervention as a viable course of action.Too bad only Ron Paul was the closest thing to that. No others in sight. Progressives been in charge of this train-wreck for over a hundred years. Nothing done in that time is constitutional at all in the slightest.Bush is a progressive, Clinton, Obirdbrain and even Trump. At least Trump sorta recognizes that progressivism is criminal at it's core and is sorta pushing back. Islam killed more of its own in Iraq than US forces did. Actual numbers attributed to the progressive criminal Bush are far less than your ignorant statement would suggest.Ask the Chinese how many of their own they killed and how many continue to die at the hands of the despots running the totalitarian criminal enterprise that is the stupid Chinese government. here I will help.https://www.hawaii.edu/powerkills/NOTE2.HTMThe Chinese are the bloodiest of the bloody. Grimaldus

In reply to by Justin Case

Justin Case Grimaldus Sat, 08/12/2017 - 13:00 Permalink

Well, in light of America's impeccable record in this regard, Kerry and Sulzberger speak with the moral authority of  $5 crack-whores lecturing young girls on the virtue of chastity. From the picture-is-worth-1000 words department, The Anti-New York Times proudly pays tribute to America's shining historical and contemporary records on "human rights".   America's "respect for the human rights" of Filipinos 'water-boarded' during Globalist Teddy Roosevelt's Philippine-American War. America's "respect for the human rights" of innocent Japanese-Americans interned during World War II. America's "respect for the human rights" of the 100's of 1000's of German civilians suffocated or roasted alive during the firebombing of Dresden. America's "respect for the human rights" of 100's of 1000's of Japanese civilians who died as the direct or indirect result of the wholly unnecessary and unjust Atomic bombings. America's "respect for the human rights" of Vietnamese civilians napalmed during the unnecessary Vietnam War. America's "respect for the human rights" of the children that Bill and Killary Clinton burned alive at Waco, Texas. America's "respect for the human rights" for the 1000's of helpless fleeing Iraqis that Colin Powell mass slaughtered on the infamous "Highway of Death".America's "respect for the human rights" of the Iraqi civilians killed during the 'Shock and Awe' campaign of the second Gulf War. America's "respect for the human rights" of the tortured Iraqi prisoners held at Abu Graib. America's "respect for the human rights" of the innocent Iraqi leader Saddam Hussein and his sons -- executed by U.S. proxies. America's "respect for the human rights" of the innocent Qaddafi of Libya -- sodomized with a bayonet and killed by U.S. proxies in a disgraceful spectacle which Killary Clinton later cackled and boasted about. America's "respect for the human rights" of the non-violent 88-year old tax protester Irwin Schiff (Peter's father) -- still in prison for "tax evasion". America's "respect for the human rights" of a Ukrainian-American from Cleveland named John Demjanuk. The retired auto worker was falsely accused of being an SS guard at the Auschwitz internment camp, extradited to Israel for trial, cleared by an Israeli judge, returned to America, and then deported to Germany where he soon died in custody at age 91.America's "respect for the human rights" of the innocent Palestinians who have, for the past 70 years, endured relentless abuse, dispossession, bombing, torture and death at the bloody hands of its U.S. taxpayer-funded and armed "ally", master, Israel. America's "respect for the human rights" of the owners of 'Sweet Cakes', an Oregon bakery fined $135,000 and forced to close shop after refusing to bake a "wedding cake" for a pair of angry bull-dike lesbians. America's "respect for the human rights"  of the owners of 'URLoved', a San Francisco photography agency forced to close its photo studio after refusing to shoot same-sex weddings.  America's "respect for the human rights"  of e-mail, telephone and cell phone users whose private communications can be monitored without a search warrant.  America's "respect for the human rights" of airline passengers, who must submit to genital groping, verbal abuse and see-through body scanners or else be fined $11,000 and banned from flying.  Israeli Nationals are exempt from TSA screening.   America's "respect for the human rights" of alternative political candidates and parties who are deliberately denied access to state ballots, blacked-out by the Establishment media, and are ignored during the televised debates, if not banned from the debates altogether.America's "respect for the human rights" of millions of unborn babies, some as old as nine months in the womb, who are brutally dismembered and often sold for parts! This review barely scratches the surface of the tyrannical crimes routinely committed against innocent people, both foreign and domestic, by the vile Globalist-Zionist entity based in the New York-DC Corridor. And this son-of-a-bitch Frankenerry, cheered on by the hypocritical scum of Sulzberger's Slimes, dares to lecture General el Sisi as to how to handle the CIA-NGO filth of Egypt?!  America's PRC (Predatory Ruling Class) is as evil as it is insane. Indeed, the projection of one own faults and vices on to others is a classic indicator of a dangerous narcissistic sociopath -- and when it comes to psychotic behavior, no nation (except maybe Israel) surpasses the Disunited States of Amerika; and no newspaper surpasses Sulzberger's Slimes.            take the plank out of your own eye, and then you will see clearly to remove the speck from your brother'ss eye."  

In reply to by Grimaldus

Justin Case Grimaldus Sat, 08/12/2017 - 13:17 Permalink

Courageous individuals, such as Assange, Manning and Snowden, have been attempting to awaken the American people to the failure of their government to keep the peace. This is because other institutions that might possibly have held the government to some sort of account have utterly failed to do so, at least so far. Social institutions like the church and the media, have failed to pressure the U.S. to change. They have, in fact, largely supported the government. The lower courts have proven to be an inadequate barrier against government’s failures in keeping the peace. The two-party system has failed to produce a peace party with influence. Intellectuals, journalists and opinion-makers have failed to set peace as their objective and rally the public around a peace movement. Instead, we see success of warmongers, fear mongers, and those who benefit from war.The major purpose of government, according to its supporters, is to keep the peace, which means protecting rights, freedoms, lives and property. It cannot be done by invasions of these. The U.S. government has failed so badly that today we wonder what bad thing it will do next. We wonder if there are any institutional limits to what laws the U.S.A. can enact. We wonder what powers the Executive will claim next. We wonder what the government will do next to its citizens. Since the Supreme Court, which is part of the U.S.A., claims the power to decide what is lawful and what is not, we wonder how there can be any legal limits to government usurpations and tyranny.

In reply to by Grimaldus

Grimaldus Justin Case Sat, 08/12/2017 - 16:18 Permalink

Well it looks like criminal progressives, like those in the Chinese government are a problem yes?In the USA it might be possible to restore constitutional government as it is supposed to be. Slim chance but it is there.No such luck for China. They have proven over thousands of years that nothing but murdering despotic governments will succeed murdering despotic governments.      Grimaldus

In reply to by Justin Case

Justin Case Justin Case Sat, 08/12/2017 - 13:58 Permalink

A CENTURY OF U.S. MILITARY INTERVENTIONSSince the September 11 attacks on the United States, most people in the world agree that the perpetrators need to be brought to justice, without killing many thousands of civilians in the process. But unfortunately, the U.S. military has always accepted massive civilian deaths as part of the cost of war. The military is now poised to kill thousands of foreign civilians, in order to prove that killing U.S. civilians is wrong. First, they were explained to the U.S. public as defending the lives and rights of civilian populations. Yet the military tactics employed often left behind massive civilian "collateral damage." War planners made little distinction between rebels and the civilians who lived in rebel zones of control, or between military assets and civilian infrastructure, such as train lines, water plants, agricultural factories, medicine supplies, etc. The U.S. public always believe that in the next war, new military technologies will avoid civilian casualties on the other side. Yet when the inevitable civilian deaths occur, they are always explained away as "accidental" or "unavoidable." Second, although nearly all the post-World War II interventions were carried out in the name of "freedom" and "democracy," nearly all of them in fact defended dictatorships controlled by pro-U.S. elites. Whether in Vietnam, Central America, or the Persian Gulf, the U.S. was not defending "freedom" but an ideological agenda (such as defending capitalism) or an economic agenda (such as protecting oil company investments). In the few cases when U.S. military forces toppled a dictatorship--such as in Grenada or Panama--they did so in a way that prevented the country's people from overthrowing their own dictator first, and installing a new democratic government more to their liking.

In reply to by Justin Case

richsob Bay of Pigs Sat, 08/12/2017 - 11:41 Permalink

It could be the worst decision China ever made too.  (a) The value of their remaining UST's would crater in value.  (b) The U.S. would retaliate by cutting off imports and the Chinese economy would crash in two months.  The Communist Party doesn't even want to think about millions and millions of pissed off Chinese in the streets blaming them, the U.S., whoever for destroying all their jobs.  Nope.  The Chinese are smarter than to crash the UST market.  They would stir up some serious shit somewhere else......possibly a war with a local neighbor like Japan to take the Chinese peoples' minds off their predicament.

In reply to by Bay of Pigs

edotabin richsob Sat, 08/12/2017 - 15:17 Permalink

Yes, I've always maintained that trade is used as a means of sucking nations into the global system. Over time the local .gov lose the ability to control and the impact of their decisions diminishes. So, it's an invasion of sorts.Without having read everything that happened overnight, I'm assuming China refused to budge on NK and thus Trump will atempt to strike at them by other means.Look, MIC, (((THEY))) and other theories aside, too much was transferred to China and too soon and too much leverage was expected as well. You can't expect that someone will be so greatful to you that they will do anything you ask. They can always say "Thanks!" but not participate or comply. Whether or not the US has enough leverage remains to be seen by the outcome of the trade war.  

In reply to by richsob

HoyeruNew richsob Sat, 08/12/2017 - 22:42 Permalink

oh yes cutting off imports will work oh so well with the upcoming Christmas season. and besides all thsoe import are made BY Ameirican companies. Cut off the imports and watch Walmart and most of American;s stores get bare shelf within a month. You think AMerican companeis will be very happy with The Orange Buffoons when their sales crash by 90%? try Reality for a change pal.

In reply to by richsob

Justin Case Bay of Pigs Sat, 08/12/2017 - 14:06 Permalink

China knows the USD issue and isn't stupid. Aside from buying tons of gold, billions will be spent on OBOR, using that surplus to grow their economy across Eurasia and tap millions of isolated consumers, while merican empire rots from the core. The merican corporations operating in China will benefit, but no jobs for merican, just millions for the merican corporate elite and jobs for the Chinese population. .

In reply to by Bay of Pigs

Justin Case Grimaldus Sun, 08/13/2017 - 00:23 Permalink

If we are looking for evidence of communism in China, the first and most important place to look is at the economy. The economy in China is now decidedly capitalistic in nature. Average Chinese citizens can start their own businesses and put their income into private bank accounts. Chinese citizens can buy stocks in companies and enjoy the revenues or suffer the losses. As of just a few years ago, private property rights have been greatly enhanced in China, and Chinese people can now be more secure that their land will not be taken away from them. Let us not forget about the heavy international investment that has been permitted in China which has played a major role in fueling this developing and booming economy. As a result, there are very rich people and very poor people in China as well as an emerging middle class. Chinese citizens, who always carried a good sense for business but were restricted from entrepreneurship in the past have now been more free to take risks and build successful companies. Thus capitalism has transformed the Chinese economy and changed people’s lives forever.Some people just can't understand that China now employs capitalist and socialist economic policies! Its ridiculous! How can people be so stupid! China has been reforming from communism for 30+ years now. So many people never change their mind, but never over something so stupid! its not like this is up for debate, 10 minitues on google will show anyone that China is no longer 100% communist. China is, indeed, going through a transition, but it is not a transition from capitalism to communism. The evidence supports a conclusion that feudal appropriation has prevailed in both agriculture (during the commune-era) and industry (during the SRE-era) in the recent past and is now being displaced by capitalism in industry and increasingly in agriculture. In other words, China is going through a transition from feudalism to capitalism. I just don’t see calling such a transition socialism.Capitalism will be much more robust if it’s not a monopoly of the West, but flourishes in societies with different cultures, religions, histories, and political systems. From Wikipedia, the free encyclopediaThe socialist market economy is the economic model employed by the People's Republic of China. It is based on the dominance of the state-owned sector and an open-market economy, and has its origins in the Chinese economic reforms introduced under Deng Xiaoping. The ideological rationale is that China is in the primary stage of socialism, an early stage within the socialist mode of production, and therefore has to adapt capitalist techniques to thrive. Despite this, the system has widely been cited as a form of state capitalism.[1][2]It's time to update yoar fictional mindset and resist fake news narratives of demonizing labels of countries the administrations cannot conquer.

In reply to by Grimaldus

Grimaldus Justin Case Sun, 08/13/2017 - 12:59 Permalink

Dude you are wasting your breath. Most can see right thru the Chinese state propaganda.When you allow the communist party to be overthrown via free elections then China will not be communist.Anything else is pure bullshit.  "Look at the economy" but don't look at the super corrupt criminal communist governemnt? F-in please.Progressive assclowns may believe you though....No need for the war the Chinese military so openly advocates, let's just do fair business, that's all.   Grimaldus

In reply to by Justin Case

Blankone Troll Magnet Sat, 08/12/2017 - 11:24 Permalink

Troll Magnet says to round up "illegal Chinese".
What? How many illegal Chinese are in the US? Very few. There are legal Chinese, with a visa, who brought money with them, and bought real estate. There are also legal Chinese who started little businesses and are working to become citizens. And who's kids strive to get an education and advance.

TM calls to revoke green cards and citizenship's awarded to Chinese in the last 20 yrs. What? These are people who actually contribute. How about the Latin's, those brought in from Africa, where have all the Arab's come from in the last 20 yrs? Many of those ARE illegal, worry about them.

In reply to by Troll Magnet

keep the basta… Troll Magnet Sat, 08/12/2017 - 21:02 Permalink

You mean that China forces you mericans to BUY???? every "piece of toxic shit they export". your country sucks it up it mate. sucks hard. Mericans order it and suck it out that how it gets exported.China can buy better aircraft from Russia, build excellent cars or buy from Germany or Japan, has far more intelligent /educated  young than US... look at the OECD measures in science/maths and the results of the  programming teams competition.. Russia and China and one from Poland in the first 10 winners. One  US and one Aus team in the next 10 rest Russia and ChinaI agree. You are better off without  sucking  stuff from the rest of the world. Pay your debts and build your own.

In reply to by Troll Magnet