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Trump’s trade war: what is it and which products are affected?

11 Juillet 2018

Analysts said this was the quiet before the storm, with United States exports likely to fall off in the third quarter as both sides feel the effects of worsening trade relations.

Watkins farms about 8,000 acres of corn and soybeans and says these tariffs are going to hurt business.

"Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports", Heisdorffer said in a statement. "The math is simple".

"The damage is already serious for American soybean farmers whose biggest customer is China".

Trump has enraged such US allies as the European Union, Canada and Mexico by hitting them - and just about everyone else - with a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum.

Products of beans made by a US company are displayed for sale at an worldwide supermarket Jenny Lou's in Beijing, China June 29, 2018.

Trump and Canadian Prime Minister Justin Trudeau traded barbs over the steel tariffs at a farcical summit of the G7 richest countries that ended on June 9.

He told CNBC that there may be no way to escape a trade war with China.

On Friday, the Trump administration is slated to unilaterally impose tariffs on $34 billion worth of Chinese goods. Beijing had said it would retaliate with punitive measures on USA products worth a similar amount, including soybeans, pork and cotton, but it had not officially confirmed on Friday that they had taken effect.

A survey on CEOs of 200 large US enterprises showed that 90 percent of the executives were anxious about higher costs brought by trade frictions, and 95 percent of them regarded a potential slump in exports resulting from foreign retaliation a moderate or significant risk.

Despite three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump made a decision to go ahead with the tariffs.

The industry only gained access to the Chinese market - the largest consumer market in the world - about three years ago.

He has said the tariffs are aimed at stopping the "unfair transfers of American technology and intellectual property to China" and protecting jobs. That means U.S. apple prices could take a serious dive, costing growers money.

Heavy equipment maker Caterpillar Inc, for whom China is also its second-biggest market after the United States, has fallen 13.5 percent over the same period.

"This will impact growers coast to coast", Grondine said. But German automaker BMW said it is unable to "completely absorb" new Chinese tariff on imported US -made models and will raise prices.

There are fears that the tariffs will hit USA jobs as well.

Daimler, the carmaker behind Mercedes-Benz, already warned last month that its profits will fall this year.

Following the tax package approval, expectations were high that companies would ramp up not just buybacks and dividends but capital spending in 2018, said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

Terming the manufacturing of flags for Trump's 2020 bid as "completely normal", he said, "That is trade".

China also has other ways to retaliate by going after US companies such as Apple Inc. and Walmart Inc., which operate in its market and are keen to expand.

"They want to compete and win, not be "protected" by Washington D.C. from the foreign markets they've dominated for decades", it said.

More than three-quarters of the soybeans grown in Michigan are shipped to other states and other countries, including Canada, Mexico and China according to the Michigan Soybean Promotion Association.

From blue jeans to motorbikes and whiskey, the EU's hit-list of products targeted the most emblematic of American exports. "No one will emerge as a victor from trade war, it benefits no one".

Twenty-five percent US tariffs took effect at midnight and affect more than 800 Chinese products - including industrial machinery, office equipment, electronics, medical devices and vehicles.

The Trump administration contends China has deployed predatory tactics in a push to overtake USA technological dominance.

Trump’s trade war: what is it and which products are affected?