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PM to break law for Brexit? (9 September, 2019)

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PM to break law for Brexit? (9 September, 2019)

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It's been a very big day in British politics.

The government has suffered a major defeat, with potentially significant consequences for Brexit - specifically when it happens and how it happens.

An early election is now also on the cards.

Here's your guide to the bruising face-off between parliament and Prime Minister Boris Johnson.

This is all about who's driving Brexit ahead of the 31 October deadline for the UK to leave the EU.

Mr Johnson has been determined to leave by that date with or without a deal.

On Tuesday, politicians opposed to "no-deal" grabbed the steering wheel to block this outcome. They voted to seize control of the parliamentary agenda on Wednesday.

They plan to pass a law to force Mr Johnson to delay Brexit until 31 January unless MPs approve a new deal.

However Mr Johnson won't ask the EU for more time. He said the government would instead call for an early election.

But it's unclear if two-thirds of MPs will agree, as required.

How did we get here?

The British public voted to leave the EU well over three years ago.

In order to do that, the last prime minister, Theresa May, negotiated a deal with the EU covering the terms on which the "divorce" would happen. Break-up day was meant to be 29 March 2019.

Then, as now, parliament disagreed with the government. Mrs May couldn't get her deal through and was forced to ask for Brexit to be delayed. Eventually she stepped down.

What could happen next

Pound volatile in further Brexit turmoil

What is 'no-deal Brexit'?

Boris Johnson was voted in as the new leader by members of the Conservative Party and became prime minister in late July.

He vowed to take Britain out of the EU by the new deadline of 31 October, "no ifs or buts".

But like her, he now finds himself clashing with parliament, including some of his fellow Conservative politicians.

Why can't he do what he wants?

It's all about numbers. Boris Johnson, on Tuesday morning, had a working majority in parliament of one.

By late afternoon this razor-thin majority vanished when a Conservative MP defected to the pro-EU Liberal Democrats.

The arithmetic meant it was always going to be hard for the government to defeat a motion supported by a large group of MPs from many parties opposed to a no-deal Brexit.

A major headache for Mr Johnson was that at least a dozen of his own MPs had made clear they were likely to rebel and vote for the motion.

This "rebel alliance" agrees with a cross-section of MPs that a no-deal Brexit would cause economic chaos.

So they helped to take the parliamentary agenda out of the government's hands - the first step in passing a law to block no-deal.

Who are the Conservative Brexit rebels?

Such are the bitter divisions in the Conservative Party that they did this despite facing the threat of being barred from running for the party in future elections.

It's worth noting that Nicholas Soames - the grandson of Boris Johnson's political hero Winston Churchill - said he would be among the rebels.

I thought time was tight?

It is. Big Ben is undergoing repairs but the minutes are still ticking away in Westminster.

This is because of Mr Johnson's decision to ask the Queen to suspend parliament from sometime next week - squeezing the amount of time that MPs have to avert no-deal.

They will kick off the process on Wednesday by introducing legislation that could become law next week if it passes all hurdles.

If it does, this would tie Mr Johnson's hands and compel the government ask for another Brexit delay.

So where does the election come in?

Mr Johnson has said there is no way he will ask the EU for another Brexit delay.

He has also said many times that by taking no-deal off the table, MPs will torpedo the UK's negotiations with the EU.

After the government lost the vote, he said it would call for an early election in mid-October.

Why would Boris Johnson do this? We talked about numbers. Mr Johnson would hope his party could win a new majority in parliament that would make his Brexit plans much easier. Polls currently put the Conservatives at a healthy lead over Labour.

But many Conservatives fear that any election in an unpredictable political environment risks a hard-left government led by Jeremy Corbyn, the leader of the opposition Labour Party.

Who decides when the election is?

Some Westminster watchers believe that Mr Johnson actually doesn't want an early election at all. Two-thirds of MPs would need to vote for one and while Labour has long called for an election, senior figures have said it wants one on its "own terms".

Some MPs are worried he could call an election and later change the date to after 31 October, the current Brexit deadline.

If that happened he could tell voters he achieved Brexit, no ifs or buts.

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It's been a very big day in British politics. The government has suffered a major defeat, with potentially significant consequences for Brexit - specifically when it happens and how it happens. An early election is now also on the cards. Here's your guide to the bruising face-off between parliament and Prime Minister Boris Johnson.

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- CPAP Issue 4 p. 4-5
- SEV Update Issue Term 3
- Online modules from your textbook p. 26-28

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Brexit Case Study:                                                   Core Questions:

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Brexit Case Study:                                                   Core Questions:

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1. What were 2 causes of Brexit?
2. What are 2 challenges of Brexit?
3. What are 2 responses to Brexit from other global actors (consider; Ireland, EU, G7).

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Brexit Case Study:                                     Extended Questions

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Brexit Case Study:                                     Extended Questions

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1. Outline the causes of Brexit. Consider how they are connected.
2. Make a list documenting the impacts of Britain leaving the EU (e.g. social, economic, political, cultural...)
3. Consider Ireland, which has a difficult and contested history with Britain, and wishes to remain in the EU.
A) look at Ireland's position on Brexit and what their
agenda is
B) consider the consequences for Ireland if they stay
in the EU
C) consider the consequences for Ireland if they the
UK leaves the EU.
4. Evaluate globalisation's impact with the creation of the Brexit crisis (i.e. its connection to the philosophy behind the formation of the EU and now Britain's decision to leave.)
5. Note some of the actual and projected consequences of Brexit. (For guidance consider how it links to the ideas surrounding what is a 'global crisis').
6. Compare Brexit to the Trade War, how are they similar and how are they different?
7. Develop an argument for or against Brexit. Justify your arguments and consider what would be a realistic resolution.

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Brexit explained: what happens when the UK leaves the EU?

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SHANGHAI (Reuters) - U.S. electric vehicle maker Tesla Inc () will on Friday raise its prices in China, earlier than planned, and is considering increasing prices again in December should Chinese tariffs on U.S.-made cars take effect, two people familiar with the matter said.

The people declined to be identified as the plan has not been made public. A Tesla representative did not immediately respond to Reuters' request for comment on Monday.

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Tesla to raise prices in China on August 30, may increase again in...

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U.S. electric vehicle maker Tesla Inc will on Friday raise its prices in China, earlier than planned, and is considering increasing prices again in December should Chinese tariffs on U.S.-made cars take effect, two people familiar with the matter said.

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The trade war between the U.S. and China has heated up in the past week, putting pressure on Apple ( AAPL - Get Report) shares, but one analyst says the tech giant has a greater ability to weather potential tariffs than the market currently recognizes.

U.S. tariffs on additional goods from China, including smartphones and other electronics, are scheduled to go into effect Dec. 15, and President Trump on Friday threatened to raise the level of those tariffs from 10% to 15% in response to the Chinese government imposing its own additional tariffs on U.S. goods. He also ordered U.S. companies to look for ways to not do business with China, sending shares of Apple, which assembles the majority of its iPhones in China, down 4.6% on Friday.

Apple analysts have outlined how planned tariffs would impact Apple's profits, based on whether it chooses to absorb the higher costs or pass them along to consumers through price increases. Cowen analyst Krish Sankar outlined in an early August note that 10% tariffs would have a negative earnings per share impact on Apple of anywhere between 0.5% and 4%.

But JPMorgan analyst Samik Chatterjee wrote in a note on Monday that "we see certain silver linings relative to timing that might allow Apple to navigate the challenging dynamic better than investors currently expect." He noted that Apple's ability to mitigate the potential tariffs is "underappreciated."

One factor Chatterjee says investors aren't much considering is the decline in memory chip prices, which reduces its own costs. He mentioned that the total year-over-year decline for those costs for the launch of new phones in September would amount to roughly $30 to $50 per phone. This is due primarily to a decrease in the cost of DRAM and NAND prices, Chatterjee said, a decrease that has hurt Micron's ( MU - Get Report) revenue growth.

This is "allowing the company to absorb a large portion of the tariffs without a retail price increase for the American consumer," said Chatterjee. He said Apple would have had an 8% hit to EPS from absorbing 10% tariffs, but that the EPS hit could now be less than that with the memory cost decrease partially offsetting the tariffs.

Chatterjee's belief that Apple can maintain last September's iPhone profit margins without lifting prices would be good news in terms of sales expectations. Cowen's Sankar thinks higher iPhone prices would equate to 5% to 20% "demand destruction," while Wedbush Securities analyst Dan Ives sees 6 million to 8 million fewer iPhones sold in the event of a price increase.

As for Apple's non-iPhone hardware products, which include AirPods, Apple Watches and iPads, "pricing power is higher given limited competition" for these devices, Chatterjee argued. These products represent about 28% of Apple's total revenue. "In addition, we see a significant memory price benefit on Mac devices," Chatterjee added.

Aside from footwork around price and cost, Apple could also move some of its production out of China. Ives has pointed out Apple is trying to move 5% to 7% of iPhone production out of China, which would take at least 18 months. Moving 30% of such production out of the country would take roughly three years.

Apple shares were rising 2% to $206.67 on Monday and are up about 31% year-to-date.

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Apple's Ability to Mitigate Tariffs Is 'Underappreciated,' JPMorgan Analyst Says

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The trade war between the U.S. and China has heated up in the past week, putting pressure on Apple ( AAPL - Get Report) shares, but one analyst says the tech giant has a greater ability to weather potential tariffs than the market currently recognizes. U.S.

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The Australian share market has been hammered, losing $24 billion after a dramatic escalation of trade hostilities between the US and China over the weekend.

The benchmark ASX200 tumbled at the open but recouped some of its losses by close to finish the day down 1.27 per cent.

The Australian dollar was also hit hard, falling below 67 US cents to its lowest point in a decade but recovered slightly to be buying 67.37 US cents shortly after 4pm.

The Chinese government announced retaliatory tariffs on $US75 billion of US goods on Friday and US President Donald Trump said his country would raise its existing tariffs on $US250 billion worth of Chinese imports to 30 per cent from the current 25 per cent beginning October 1.

On Wall Street on Friday, the Dow Jones Industrial Average finished down 2.37 per cent, the S&P 500 was down 2.59 per cent and the tech-heavy Nasdaq was down 3.00 per cent.

The Australian energy sector was aggressively sold-off due to its stocks being exposed to any tariffs China said it will enforce on oil, CMC Markets chief market strategist Michael McCarthy said.

"Given that they're the two largest economies in the world, if they're both going to be slowed by this dispute then demand for energy is likely to be lower and that was reflected in the oil price and in those energy stocks," he told news.com.au.

The Aussie dollar followed this sector's fall for the same reason.

"Remembering how important coal, iron ore and other commodities are to our export performance, when we see weakness in those commodities it generally translates to pressure on the Australian dollar," Mr McCarthy said.
ASIAN SHARES SINK
The pain for investors extended across the region with Japan's Nikkei and the Hong Kong share market falling lower, while the Chinese yuan came under pressure.

Wall Street nosedived on Friday when President Donald Trump announced a 5 per cent additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US products.

At the G7 meeting in France over the weekend, Trump caused some confusion by indicating he may have had second thoughts on the tariffs.

But the White House said on Sunday that Trump wished he had raised tariffs on Chinese goods even higher last week, even as he signalled he did not plan to follow through with a demand that US firms close operations in China.

Trump is now set to hold a joint news conference with French President Emmanuel Macron later on Monday.

"There is an uneasy feeling that the very fragile negotiations are spiralling out of control," wrote analysts at ANZ in a note.

"The escalation suggests uncertainty will continue to weigh on global trade, industrial production and investment, with no sign of a resolution."
WALL STREET PLUNGES AS TRADE WAR HEATS UP
The latest exchanges in the long-running tariff row triggered a broadbased sell-off that hit shares of companies with high exposure to China the hardest based on Trump demanding US companies seek alternatives to doing business with the Asian super power, such as chipmakers and other top technology names.

Dow Jones Industrials components Intel and Apple dropped 3.9 per cent and 4.6 per cent respectively on Friday.

The developments overshadowed a highly anticipated speech from US Federal Reserve Chair Jerome Powell, in which he reiterated a pledge the central bank would "act as appropriate" to support the economy.

Powell stopped short of committing to the series of rapid-fire rate cuts Trump has been demanding.

Trump's tweeted response to the speech labelled Powell an "enemy".

David Katz, chief investment officer at Matrix Asset Advisers in New York, said the president was clearly upset.

"(Trump) seems to be irate that China reacted to what the US has done and is basically having a mini-tantrum and is angry at everybody," he said. "He's angry at China, he's trying to put the blame on the market and the economy on Powell."

Mr Katz added, "But at this point, it's very clear ... that the issues that have been coming to fruition of late with the economy and the slowdown are all trade-related and have very little to do with the Fed."

The markets clearly believe, however, the Fed will have to act aggressively and are fully priced for at least a quarter-point cut in September and more than 110 basis points of easing by the end of 2020.

"Trump shows no signs of moderating his destructive trade policies," said JPMorgan analyst Adam Crisafulli.

"Central banks can't fully ameliorate the downside of a global trade war," he added. "Companies will enter lockdown mode in terms of spending, and eventually hiring, until at least the November 2020 election amid all the uncertainty."

The escalating US-China trade dispute has emerged as a major tripping point for the market in recent weeks.

Friday marked the third decline of more than two per cent for the S&P 500 so far in August, and the benchmark index has now shed 5.8 per cent in the last four weeks.
-with AAP and Reuters
Continue the conversation on Twitter @James_P_Hall or james.hall1@news.com.au

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The Australian share market has been hammered, losing $24 billion after a dramatic escalation of trade hostilities between the US and China over the weekend. The benchmark ASX200 tumbled at the open but recouped some of its losses by close to finish the day down 1.27 per cent.

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Watch the video and read the article:

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On Thursday, Britain voted to leave the European Union- an option dubbed " Brexit." Almost 52 percent of Britons voted in favor of leaving.

Although the "leave" campaign often focused on emotional arguments about immigration, there are in fact many reasons those in favor of leaving believed it would benefit the UK. They came from across the political spectrum, and some of the arguments even contradict others. Here are seven of the most significant.

Argument 1: The EU threatens British sovereignty

This is probably the most common argument among intellectual-minded people on the British right, expressed by Conservative politicians such as former London Mayor Boris Johnson and Justice Minister Michael Gove.

Over the past few decades, a series of EU treaties have shifted a growing amount of power from individual member states to the central EU bureaucracy in Brussels. On subjects where the EU has been granted authority - like competition policy, agriculture, and copyright and patent law - EU rules override national laws.

Euroskeptics emphasize that the EU's executive branch, called the European Commission, isn't directly accountable to voters in Britain or anyone else. British leaders have some influence on the selection of the European Commission's members every five years. But once the body has been chosen, none of its members are accountable to the British government or to Britons' elected representatives in the European Parliament.

Argument 2: The EU is strangling the UK in burdensome regulations

Critics like Johnson say the EU's regulations have become increasingly onerous:

Sometimes these EU rules sound simply ludicrous, like the rule that you can't recycle a teabag, or that children under eight cannot blow up balloons, or the limits on the power of vacuum cleaners. Sometimes they can be truly infuriating - like the time I discovered, in 2013, that there was nothing we could do to bring in better-designed cab windows for trucks, to stop cyclists being crushed. It had to be done at a European level, and the French were opposed.

Many British conservatives look at the European bureaucracy in Brussels the same way American conservatives view the Washington bureaucracy. Gove has argued that EU regulations cost the British economy "£600 million every week" ($880 million). (Though this figure is disputed.)

Argument 3: The EU entrenches corporate interests and prevents radical reforms

This is the mirror image of the previous two arguments. Whereas many British conservatives see the EU as imposing left-wing, big-government policies on Britain, some on the British left see things the other way around: that the EU's antidemocratic structure gives too much power to corporate elites and prevents the British left from making significant gains.

"The EU is anti-democratic and beyond reform," said Enrico Tortolano, campaign director for Trade Unionists against the EU, in an interview with Quartz. The EU "provides the most hospitable ecosystem in the developed world for rentier monopoly corporations, tax-dodging elites and organized crime," writes British journalist Paul Mason.

This left-wing critique of the EU is part of a broader critique of elite institutions more generally, including the World Trade Organization, the International Monetary Fund, and the World Bank. Brexit supporters on the left would have a lot in common with Americans who are against trade deals like the Trans-Pacific Partnership.

Argument 4: The EU was a good idea, but the euro is a disaster

The United Kingdom has had a significant faction of euroskeptics ever since it joined the EU in 1973. But until recently, this was a minority position.

"There are nearly 130 Conservative MPs who have declared for leaving the EU," economist Andrew Lilico told me last week. "If you went back 10 years, you would have struggled to find more than 20 who even in private would have supported leaving the EU."

So what changed their minds? The global recession that began in 2008 was bad around the world, but it was much worse in countries that had adopted Europe's common currency, the euro. The unemployment rate shot up above 20 percent in countries like Greece and Spain, triggering a massive debt crisis. Seven years after the recession began, Spain and Greece are still suffering from unemployment rates above 20 percent, and many economists believe the euro was the primary culprit.

Luckily, the UK chose not to join the common currency, so there's little danger of the euro directly cratering the British economy. But the euro's dismal performance still provides extra ammunition to Brexit supporters.

Many economists believe that deeper fiscal and political integration will be needed for the eurozone to work properly. Europe needs a common welfare and tax system so that countries facing particularly severe downturns - like Greece and Spain - can get extra help from the center.

But that makes Britain's continued inclusion in the EU awkward. Britain is unlikely to go along with deeper fiscal integration, but it would also be unwieldy to create a set of new, parallel eurozone-specific institutions that excluded the UK.

So, the argument goes, it might be better for everyone if the UK got out of the EU, clearing the path for the rest of the EU to evolve more quickly into a unified European state.

Argument 5: The EU allows too many immigrants

The intellectual case for Brexit is mostly focused on economics, but the emotional case for Brexit is heavily influenced by immigration. EU law guarantees that citizens of one EU country have the right to travel, live, and take jobs in other EU countries.

British people have increasingly felt the impact of this rule since the 2008 financial crisis. The eurozone has struggled economically, and workers from eurozone countries such as Ireland, Italy, and Lithuania (as well as EU countries like Poland and Romania that have not yet joined the common currency) have flocked to the UK in search of work.

"In recent years, hundreds of thousands of Eastern Europeans have come to Britain to do a job," British journalist and Brexit supporter Douglas Murray told me last week. This, he argues, has "undercut the native working population."

The UK absorbed 333,000 new people, on net, in 2015. That's a significant number for a country Britain's size, though according to the CIA the UK still received slightly fewer net migrants, relative to population, than the United States in 2015.

Immigration has become a highly politicized issue in Britain, as it has in the United States and many other places over the past few years. Anti-immigration campaigners like Nigel Farage, the leader of the far-right UK Independence Party, have argued that the flood of immigrants from Southern and Eastern Europe has depressed the wages of native-born British workers. Some voters are also concerned about immigrants using scarce public services.

"One of the causes for the great public disgruntlement," Murray argues, is that Labour governments at the turn of the century " massively understated the numbers [of immigrants] to be expected," creating public distrust of current pledges to keep migration under control.

Argument 6: The UK could have a more rational immigration system outside the EU

While many Brexit supporters simply want to reduce the amount of immigration overall, others argue that the UK could have a more sensible immigration system if it didn't have the straitjacket of the EU.

EU rules require the UK to admit all EU citizens who wants to move to Britain, whether or not they have good job prospects or English skills.

"Leave" advocates argue that the UK should be focused on admitting immigrants who will bring valuable skills to the country and integrate well into British culture. They mention the point-based immigration systems of Canada and Australia, which award potential migrants points based on factors like their language and job skills, education, and age. That, "leave" advocates argue, would allow the UK to admit more doctors and engineers who speak fluent English, and fewer unskilled laborers with limited English skills.

Argument 7: The UK could keep the money it currently sends to the EU

The EU doesn't have the power to directly collect taxes, but it requires member states to make an annual contribution to the central EU budget. Currently, the UK's contribution is worth about £13 billion ($19 billion) per year, which is about $300 per person in the UK. ("Leave" supporters have been citing a larger figure, but that figure ignores a rebate that's automatically subtracted from the UK's contribution.)

While much of this money is spent on services in the UK, Brexit supporters still argue that it would be better for the UK to simply keep the money and have Parliament decide how to spend it.

How the euro caused the Greek crisis

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Brexit: the 7 most important arguments for Britain to leave the EU

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The arguments for Brexit go beyond immigration.

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After watching the above video complete this worksheet.

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This worksheet might help you structure your notes on Trump's key actions in implementing tariffs.

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This handout summarises the key data/information from the below video. It might be helpful to supplement your notes with it!

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Optional: Use the attached worksheet for these questions
1. Summarise the reactions from the IMF in the first article)
2. Pick two other global actors and analyse their response (WTO, G20, EU).
4. Of the IMF + 2 other actors you examined, evaluate the effectiveness of their responses.

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- Summarise the key economic reasons why the US and China are having a trade war.
- What were the causes for the trade war?
- Evaluate globalisation's role in the trade war (can do dot-points or a practice essay/paragraphs).

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1. Summarise Trump's Tariffs and the justification for them
2. Note the key objectives of China 2025 and its justification
3. Consider the challenges in achieving an effective resolution to this crisis (from both a US and Chinese perspective).

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Essential Reading:
- Introduction + "What is it" p. 1-2
- "MIC 2025 Goals" p. 3-4
- "International Community Reactions" p. 8

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This details every facet of the Trade War to date and is essential reading for this unit

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A trade war is when a nation imposes tariffs or quotas on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade.

A trade war starts when a nation attempts to protect its domestic industry and create jobs. In the short run, it may work. Tariffs are supposed to give a competitive advantage to domestic producers of that product. Their prices would be lower by comparison. As a result, they would receive more orders from local customers. As their businesses grow, they would add jobs.

But in the long run, a trade war costs jobs. It depresses economic growth for all countries involved. It also triggers inflation when tariffs increase the prices of imports.

Smoot-Hawley was designed to support U.S. farmers who had been ravaged by the Dust Bowl. But it also raised food prices for Americans who were already suffering from the Great Depression. Other countries retaliated with their own tariffs. The trade war reduced international trade by 65%. It turned a recession into a depression and contributed to the start of World War II.

Trump's Trade Wars

President Donald Trump wants to reduce the $621 billion U.S. trade deficit. It's been the world's largest since 1975. Reducing the deficit is part of Trump's strategy to create more jobs.

Most of the U.S. deficit results from American enthusiasm for imported consumer products and automobiles. In 2018, the United States imported $648 billion in drugs, televisions, clothing, and other household items. It only exported $206 billion of these consumer goods. That alone added $442 billion to the deficit. America imported $372 billion worth of automobiles and parts, while only exporting $159 billion. That added another $214 billion to the trade deficit.

In early 2018, Trump said, "Trade wars are good and easy to win."﻿﻿ He has initiated three: a global tariff on steel, a tariff on European autos, and tariffs on Chinese imports. After Trump's announcement, global stock markets tumbled in fear of a trade war between the world's three largest economies. In late 2018, several U.S. companies formed "Tariffs Hurt the Heartland."﻿﻿ They are hurt by the rising costs of imported materials.﻿﻿

The Federal Reserve estimates Trump's tariffs are costing the average American household $1,245 a year.﻿﻿ This includes higher prices and lost economic growth.

In August 2019, Goldman Sachs warned that the trade war could spark a recession.﻿﻿ It's already lowered gross domestic product by 0.6%.

Farmers suffer from retaliatory tariffs imposed by China and Europe on their exports. In the farm belt of Illinois, Indiana, and Wisconsin, bankruptcies have risen to their highest level in a decade.﻿﻿ In 2017, those states produced half of all U.S. food. Nationally, farmers' income fell by $11.8 billion between January and March 2019. That's the most since 2016.﻿﻿

On May 23, 2019, Trump gave farmers $16 billion in aid to partially compensate for their losses.﻿﻿ He gave them $12 billion in 2018.

Other countries are forming trade agreements that exclude the United States. In April 2018, the EU upgraded its agreement with Mexico, removing almost all tariffs.﻿﻿ In July 2018, the EU signed an agreement with Japan that reduces or ends tariffs on almost all goods.﻿﻿ It's the largest bilateral trade agreement in existence, covering $152 billion in goods.

Steel Tariffs

On March 8, 2018, Trump administration announced a 25% tariff on steel and a 10% tariff on aluminum imports.﻿﻿ It said that dependence on imported metals threatens America's ability to make weapons.﻿﻿ The Aerospace Industry Council said Trump's tariffs would raise the military's costs instead.﻿﻿

The U.S. Congress is the only body authorized to impose tariffs. But in 1962, it allowed the president to curb imports that threatened national security.﻿﻿ The World Trade Organization can't adjudicate trade disputes that involve security.

America is the world's largest steel importer, thanks to users like automakers.﻿﻿ Steel importers employ 6.5 million workers compared to 147,000 workers in the U.S. steel industry. Tariffs lowered second-quarter profits for the big three automakers.﻿﻿ To satisfy shareholders, they passed those costs onto consumers. Costs from tariffs have already outweighed any benefits of Trump's tax plan.﻿﻿

Eight countries filed complaints with the World Trade Organization.﻿﻿ Six of them - Canada, India, and Mexico, the European Union, Norway, and Switzerland - pointed out they are allies. The other two complainants are China and Russia.

On March 26, 2018, Trump exempted South Korea, Argentina, Australia, and Brazil from the steel tariff.﻿﻿ South Korea agreed to double its import quota for U.S. cars. It allowed the United States to keep its 25% tariff on pickup trucks for an additional 20 years.

After the June 11, 2018, G7 meeting, Canadian Prime Minister Justin Trudeau said Canada would retaliate with tariffs. Mexico announced tariffs on flat steel, lamps, and pork products.

On May 17, 2019, Trump agreed to lift the tariffs in 48 hours on steel imports from Canada and Mexico.﻿﻿ In return, they will prevent Chinese steel from being shipped from their countries to the United States.

Tariffs Against Mexico

On June 4, 2019, Trump threatened to impose a 5% tariff on all imports from Mexico effective June 10.﻿﻿ He wants the government to reduce the number of asylum-seekers presenting themselves at the U.S.-Mexico border. He promised to raise the tariff to 25% if needed to force Mexico to act.

The tariff would be in violation of NAFTA. Trump said he can override the trade agreement by declaring a national emergency. Republicans, who have supported the president, are threatening to oppose this latest action.

U.S. - China Trade War Major Events Timeline

By far, the largest U.S. trade deficit by country is with China. In 2018, the U.S. trade deficit with China was $419 billion. The United States imported $540 billion, primarily in computers, cell phones, and apparel. Much of this is manufactured in China by U.S. companies but is still considered imports. The U.S. companies exported $120 billion to China. Most of this was commercial aircraft, soybeans, and autos.

In addition to reducing the trade deficit, Trump wants to limit U.S. technology transfers to Chinese companies. China requires foreign companies who want to sell products in China to share their trade secrets. The administration has also asked China to stop subsidizing the 10 industries prioritized in its "Made in China 2025" plan.﻿﻿ These include robotics, aerospace, and software. China also plans to be the world's primary artificial intelligence center by 2030. China is unlikely to agree to those demands.

The Trump administration has imposed three tariffs on a total of $250 billion in Chinese imports. The Federal Reserve estimated these tariffs cost the average household $419 per year.﻿﻿

On May 20, 2019, Trump imposed a fourth tariff. ﻿﻿ He raised tariffs to 25% on $200 billion worth of goods. The Fed estimated it would cost the average household $831 a year. Trump is increasing the pressure on trade talks that are underway.

Trump threatened to expand that tariff to an additional $325 billion of Chinese imports.﻿﻿ That would raise prices on basically all Chinese imports. On June 29, 2019, Trump delayed the proposed tariffs to encourage renewed trade talks with China.﻿﻿

On June 1, 2019, China retaliated with a 25% tariff on $60 billion of U.S. goods.﻿﻿ Some investors are also worried China may sell some of its $1.1 trillion in U.S. debt.﻿﻿ That would send interest rates higher and slow the U.S. economy.

On August 13, 2019, Trump threatened a 10% tariff on Chinese electronics and clothing.﻿﻿ The tariff would start on December 15 to limit damage on the holiday shopping season. But the tariff would begin on September 1 on other items.

Previous Tariffs

On January 22, 2018, President Trump imposed tariffs and quotas on imported Chinese solar panels and washing machines.﻿﻿ China is a world leader in solar equipment manufacturing.

On March 8, 2018, Trump asked China to develop a plan to reduce the trade deficit by $100 billion.﻿﻿ China's economic reform plan includes reducing its reliance on exports. But it said it can't stop Americans from demanding low-cost Chinese goods.

On March 22, 2018, the administration announced tariffs on $60 billion of Chinese imports.﻿﻿ It said China uses cybertheft, espionage, and government pressure to obtain leading-edge technology.﻿﻿ On March 23, China announced tariffs on $3 billion of U.S. fruit, pork, recycled aluminum, and steel pipes.﻿﻿

On March 26, 2018, the administration began negotiations with China.﻿﻿ It asked China to reduce tariffs on U.S. automobiles, import more U.S. semiconductors, and grant greater access to its financial sector.

On April 3, 2018, the administration threatened a 25% tariff on $50 billion in Chinese electronics, aerospace, and machinery.﻿﻿ On April 18, China penalized two other U.S. exports: sorghum and Boeing airplanes. It targeted industries located in states that supported Trump in the 2016 election. It lifted the sorghum tariffs on May 18.﻿﻿

On May 2, 2018, China canceled all U.S. soybean import contracts.﻿﻿ China imported $12 billion in U.S. soybeans to feed pigs, its primary meat staple. It replaced U.S. beans with those from Brazil. U.S. farmers sold one-half of their crop to China. As that market disappeared, it hurt the United States more than China. In July 2018, soybean prices hit a 10-year low as analysts predicted oversupply.﻿﻿

On April 5, 2018, Trump threatened tariffs on $100 billion more of Chinese imports.﻿﻿ It would cover just one-third of U.S. imports from China. If China retaliated in kind, it would slap levies on all U.S. exports to China.

On April 10, 2018, China announced it would reduce tariffs on imported vehicles. But most automakers find it's cheaper to build in China, regardless of tariffs.

On May 4, 2018, the administration asked China to reduce the trade deficit by $200 billion and cut tariffs on U.S. goods by 2020.﻿﻿ It asked China to end subsidies to tech companies, stop stealing U.S. intellectual property, and become open to more U.S. investment.

On May 15, 2018, China agreed to allow Qualcomm to acquire NXP. In exchange, the United States would remove tariffs on Chinese telecom company ZTE. This agreement supports a mercantilist philosophy. It promotes specific industries that are important for the leaders' political purposes.﻿﻿

The telecom industry is part of China's growth strategy, which is one reason Trump imposed tariffs. The other is that the company violated U.S. sanctions against Iran and North Korea. On June 12, the Senate blocked Trump's deal.﻿﻿ Many countries see Trump's removal of tariffs on ZTE as a weakness they could exploit.﻿﻿ They will redouble efforts to find exceptions to Trump's tariffs. Many European countries want to avoid U.S. sanctions on Iran. They may threaten tariffs on U.S. imports as a bargaining tool.

On May 21, 2018, China agreed to cut tariffs on U.S. auto imports from 25% to 15%. It would go into effect July 1.﻿﻿

On May 29, 2018, the administration said it would target $50 billion in imports from China. ﻿﻿ It would also restrict Chinese acquisition of U.S. technology.

On July 6, 2018, U.S. tariffs went into effect for $34 billion of Chinese imports.﻿﻿ China retaliated with a 40% tariff on U.S. autos.﻿﻿ Tesla announced it will build a factory in Shanghai to avoid the tariff.﻿﻿ China also announced tariffs on U.S. agricultural exports.

Midwest farmers have been stuck with excess produce and livestock. On July 24, 2018, Trump announced he would offer $12 billion in subsidies to American farmers.﻿﻿ On August 27, the administration announced a $4.7 billion bailout.﻿﻿ Corn growers alone said their costs top $6 billion.

On July 11, 2018, the administration announced 10% tariffs on another $200 billion of Chinese imports.﻿﻿ They went into effect in mid-September 2018, weeks before the 2018 midterm elections.﻿﻿ The U.S. also threatened 25% tariffs after January 1, 2019, on a variety of consumer goods, including fish, luggage, tires, handbags, furniture, apparel, and mattresses.

China threatened to retaliate by adding tariffs on $60 billion in U.S. exports.﻿﻿ In response, Trump threatened to add tariffs until all $500 billion of Chinese imports are affected. That could have reduced economic growth by 0.75 points in 2018.﻿﻿ It might have also threatened U.S. shale oil exports. China buys 20% of U.S. oil exports.﻿﻿

On August 2, 2018, the administration announced a 25% tariff on $16 billion worth of Chinese goods.﻿﻿ It went into effect on August 23. It applied to industrial equipment like tractors, plastic tubes, and chemicals. In response, China announced a 25% tariff on $16 billion worth of U.S. goods, including autos and coal. It went into effect the same day.

On September 18, 2018, the administration announced tariffs on $200 billion of Chinese imports.﻿﻿ A 10% tariff would launch on September 24, 2018. It would increase to 25% on January 1, 2019. The tariffs were imposed on 5,745 items.﻿﻿ They encompassed a wide range of electronics, food, tools, and housewares.﻿﻿

On December 1, 2018, President Trump met with China's President Xi Jinping at the G-20 Conference.﻿﻿ Trump agreed to delay the 25% tariff increase from January 1, 2019, to March 1, 2019.﻿﻿ Negotiators planned to cover 142 issues.﻿﻿ These included the protection of intellectual property, technology, and cybersecurity, as well as currency, agriculture, and energy.

On December 11, various federal agencies said they would condemn China for stealing U.S. trade secrets and technologies.﻿﻿ The Justice Department would indict hackers who broke into U.S. networks. Later that day, China agreed to roll back some auto tariffs raised earlier in.﻿﻿ It also agreed to reinstate some purchases of soybean imports and allow U.S. firms greater access to Chinese industries.﻿﻿

On January 18, 2019, China agreed to increase its purchases of U.S. exports and reduce the trade deficit.﻿﻿

On February 27, 2019, the administration dropped the threat of imposing the 25% tariff.﻿﻿ It was originally scheduled to begin January 1, then moved to March 1, then dropped.

Causes of U.S. Trade War with China

U.S. politicians have long threatened a trade war with America's largest trading partner in goods.﻿﻿ A trade deficit occurs when exports are less than imports.

In 2017, the United States exported $130 billion to China. The three largest export categories are aircraft at $16 billion; soybeans, $12 billion; and automobiles, $11 billion.﻿﻿ U.S. imports from China were $506 billion. Most of it is electronics, clothing, and machinery.

Half of all Chinese imports are goods used by U.S. manufacturers to make other products.﻿﻿ They send raw materials to China for low-cost assembly. Once shipped back to the United States, they are considered imports. The tariffs raise their costs, forcing them to either raise prices or lay off workers.

An example is salmon caught in Alaska and sent to China for processing, then sent back to U.S. grocery shelves.﻿﻿ If Trump imposes tariffs on seafood imports, it will raise prices by 25 cents to 50 cents a pound.

China is the world's No.1 exporter. Its comparative advantage is that it can produce consumer goods for lower costs than other countries can. China has a lower standard of living, which allows its companies to pay lower wages. American companies can't compete with China's low costs, so it loses U.S. manufacturing jobs. Americans, of course, want these goods for the lowest prices. Most are not willing to pay more for "Made in America."

Trade War With the EU

On March 7, 2018, the EU threatened a 25% tariff on U.S. exports such as cranberries, Harley Davidson motorcycles, blue jeans, and bourbon.﻿﻿ Trump delayed the steel tariff until May 1, 2018.﻿﻿

On April 21, 2018, the EU upgraded its trade agreement with Mexico.﻿﻿ Once signed, it will remove tariffs from almost all trade between the two areas.

On May 1, 2018, Trump announced he would delay the steel tariff against the EU until June 1, 2018.﻿﻿ He wanted the U.S. ally to cut its 10% tariff on U.S. autos. He also asked the EU to set quotas on its steel exports.

But on May 31, 2018, Trump revoked the delay. He imposed the tariff on Canada, Mexico, and the EU.﻿﻿ The U.S. Aluminum Association said the move will disrupt "supply chains that more than 97% of U.S. aluminum industry jobs rely upon."

On June 21, Germany proposed to end the EU's 10% tax on U.S. auto imports if Trump forgot about imposing a 25% tax on European auto imports.﻿﻿ There is already a 25% U.S. tariff on light trucks.﻿﻿

On June 22, the EU retaliated to the steel tariffs with tariffs on $3.2 billion of American products.﻿﻿ It targeted imports that will impact Trump's political base. Examples of these taxable imports are bourbon, motorcycles, and orange juice.

On July 17, 2018, the EU signed a trade agreement with Japan.﻿﻿ It reduces or ends tariffs on almost all goods. It's the largest bilateral trade agreement, covering $152 billion in goods. It will come into force in 2019 after ratification.

On July 25, 2018, the EU and the United States agreed to hold off on any new tariffs, reassess the steel and aluminum tariffs, and work toward zero tariffs on non-auto industrial goods.﻿﻿ The EU agreed to import more U.S. liquefied natural gas and soybeans. That would reduce its reliance on Russian LNG and help out American farmers who have lost the Chinese market due to the trade war. But Russia's LNG price is much lower than America's, so it's unlikely any big changes will be made there.

On April 15, 2019, the Trump administration announced it would impose tariffs on $11 billion in European imports.﻿﻿ It wants to force the EU to end subsidies for aircraft manufacturer Airbus. The tariffs could raise prices on imported cheese, bicycles, and kitchen knives.

How It Affects You

The trade war has raised the prices of consumer goods that use steel and aluminum. Soda and beer suppliers were the first to raise prices.﻿﻿ Costs have increased on imported clothes hangers, heavy-equipment materials, and computer chip and tool makers.

The Alliance of Automobile Manufacturers warned that U.S.-produced steel will cost more once cheap foreign imports are eliminated.﻿﻿ The move is "threatening the industry's global competitiveness and raising vehicle costs for our customers."

For example, Mid-Continent Nail in Missouri announced layoffs because steel prices became too high for them to remain profitable.﻿﻿ Harley-Davidson announced it would move some production abroad to avoid retaliatory EU tariffs.

The Maine lobster industry will suffer from Chinese retaliatory tariffs on U.S. seafood.﻿﻿ California cheese makers are already seeing their markets in China and Mexico disappear due to retaliatory tariffs.﻿﻿ Wisconsin auto parts manufacturers and the U.S. bourbon industry are other industries being punished.﻿﻿ Tariffs have also slowed U.S. timber and grain exports, according to The Wall Street Journal.﻿﻿

In October 2018, several companies forecast how much tariff-related costs will hurt in 2019:

Foreign tariffs on U.S. exports will make them more expensive. U.S. exporters may have to cut costs and lay off workers to remain competitively priced. If they fail, they may cuts costs further or even go out of business.

In the long term, trade wars slow economic growth. They create more layoffs, not fewer, as foreign countries retaliate. The 12 million U.S. workers who owe their jobs to exports could get laid off.

Consultant Oxford Economics predicted the trade war could cost the global economy $800 billion in reduced trade.﻿﻿ That could slow growth by 0.4%. It's occurring at the same time that oil prices and interest rates are rising.

Over time, trade wars weaken the protected domestic industry. Without foreign competition, companies within the industry don't need to innovate. Eventually, the local product would decline in quality compared to foreign-made goods.

The Bottom Line

A trade war may improve a nation's trade deficit in the short run but it could cost warring nations their economic growth in the long term. The United States is currently engaged in a trade war with China, the EU, Mexico, and Canada. Because of this, the affected countries have signed new trade agreements with other countries and have left America out of the loop.

President Trump's attempts at trade protectionism have already hurt the U.S. economy. They raised the prices of automobiles, computer chips, soda and beer, and heavy equipment. Companies have cut jobs because the cost of production with local materials is prohibitive. U.S. exporters of agricultural products, bourbon, cheese, and auto parts are suffering as foreign markets disappear under retaliatory tariffs. Trump must resolve the trade war soon before it wreaks serious damage on the U.S. economy.

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A trade war is when a nation imposes tariffs or quotas on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade. A trade war starts when a nation attempts to protect its domestic industry and create jobs.

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This source has a good definition of what tariffs are, as well as an infographic demonstrating some of Trump's tariffs

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Tariffs are custom taxes that governments levy on imported goods. The tax is a percentage of the total cost of the product, including freight and insurance. Tariffs are also called customs, import duties, or import fees.They can be levied on exports, but that is very rare. In the United States, the U.S. Congress sets the tariffs.

Tariffs work by increasing the price of the import. Those higher prices give an advantage to domestic products within the same market. They are used to protect a nation's industry.

But tariffs are a barrier to international trade. Other countries retaliate and impose their own tariffs. Over time, tariffs reduce business for all countries.

On average, tariffs are around 5 percent. Countries charge different tariff rates depending on the industry they are protecting. They also charge sales taxes, local taxes, and extra customs fees. Governments collect this at the time of customs clearance.

Countries waive tariffs when they have free trade agreements with each other. The United States has trade agreements with more than 20 countries. Smart U.S. businesses target their exports to these countries. They use trade agreements to execute an intelligent market entry strategy. Their foreign customers pay less for U.S. exports because they are tariff-free.

The Harmonized Tariff Schedule lists the specific tariffs for all 99 categories of U.S. imports. It's called "harmonized" because it's based on the International Harmonized System. It allows countries to classify trade goods uniformly between them. The system describes 5,300 items or most of the world's trade goods. The International Trade Commission publishes the Schedule.

The HTS is a guide. The U.S. Customs and Border Protection is the final authority that determines the tariff. It is the only agency that can provide legal advice. It also helps in determining the classification of your import.

U.S. policymakers go back and forth on whether tariffs are good or not. When a domestic industry feels threatened, it asks Congress to tax its foreign competitors' imports. It helps that sector, and that often creates more jobs. Growth in that industry improves workers' lives, but it also raises import prices for consumers. Tariffs always force a tradeoff between workers and consumers.

Another disadvantage of tariffs is that other countries retaliate. They raise tariffs on similar products to protect their domestic industries. That leads to a downward economic spiral, as it did during the Great Depression of 1929.

The following examples of U.S. tariffs illustrate how these import taxes function. They highlight their advantages and disadvantages throughout history.

On March 1, 2018, President Trump announced he would impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. He did it to add U.S. manufacturing jobs. But the tariff will raise costs for steel users, like automakers. They'll pass that onto consumers.

The president can act without Congress' approval only to curb imports that threaten national security. The Commerce Department reported that dependence on imported metals threatens U.S. ability to make weapons. The tariff hurts China the most. Its economy depends heavily on exporting steel to the United States. Trump's move comes a month after he imposed tariffs and quotas on imported solar panels and washing machines.

In June 1930, the Smoot-Hawley Tariff raised already-high tariffs on agricultural imports. Its purpose was to support U.S. farmers who had been ravaged by the Dust Bowl. The resulting high food prices hurt Americans who were suffering from the effects of the Great Depression. It also compelled other countries to retaliate with their own protectionism measures. As a result, world trade dropped 65 percent. Since then, most countries have been reluctant to impose tariffs.

In 1922, Congress imposed the Fordney-McCumber Tariff on imported products, especially agriculture. Legislators were responding to a glut of farm products. During the World War I, European farmers couldn't produce. Other countries replaced their food supply. When the European farmers returned to production, it increased the food supply beyond global demand. As prices dropped, U.S. farmers complained.

On April 22, 1828, the federal government levied the Tariff of Abominations on most imports. It was designed to protect Northeast manufacturers. Instead, it hurt the South. It did two things by raising prices on imports. First, it increased costs for most goods. That damaged the agrarian South the most.

Second, it reduced trade with England, the South's primary buyer of cotton. When British businesses couldn't compete with New England manufacturers, they bought less cotton. As a result, the South's costs rose and its income fell. That's why Southerners called this tariff an abomination.

Opposition to the tariff helped elect Andrew Jackson to the presidency. He beat John Quincy Adams, who had approved it. Vice President John Calhoun drafted the South Carolina Exposition and Protest. It granted states the right to nullify any federal law they didn't like. In November 1832, the South Carolina legislature nullified the tariff. The action created a constitutional crisis over states' rights. In January 1833, the state backed down. But tensions remained high, contributing to the start of the Civil War.

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Tariffs are custom taxes that governments levy on imported goods. The tax is a percentage of the total cost of the product, including freight and insurance. Tariffs are also called customs, import duties, or import fees.They can be levied on exports, but that is very rare. In the United States, the U.S.

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Updated August 07, 2019 11:22:04

Australia faces a "very serious" threat as a deepening of the United States-China trade war highlights weaknesses in the domestic economy, according to a former prime ministerial adviser.

Andrew Charlton, a director of economic strategy firm AlphaBeta and former economic adviser to Kevin Rudd during the global financial crisis, said the trade war came amid a weakened housing market and stifled growth in Australia.

"We have a number of really important frailties in our economy, like very high debt levels, like the ongoing playout of a housing correction," he told AM.

"It's only been this week that the [Reserve Bank of Australia] has downgraded our GDP growth.

"Australia is in a vulnerable position and the prospect of an external shock caused by a trade war and a currency war could be very serious for us."

Trade hostilities have again had an impact on Australian markets, with the ASX down and $50 billion wiped off Australian stocks this week.

The uncertainty eased on Wall Street overnight on Tuesday and stocks edged higher.

But Mr Charlton said market watchers should not expect a quick resolution to the dispute.

"Markets have been spooked because they've been forced to recognise there is little prospect of a quick deal to end the trade dispute," he said.

"It's harder to see a rational economic solution when part of the causes of this dispute are geopolitical.

"I think the worrying thing is we don't know how it will end."

Wall Street had suffered its worst trading day of the year after China devalued its currency to its lowest level in more than a decade.

In doing so, Chinese exports to the United States become cheaper and could help to offset the newly imposed tariffs.

The currency devaluation also makes United States' exports to China more expensive.

China is also considering imposing tariffs of its own on United States' agricultural exports.

Treasurer Josh Frydenberg moved to shore up confidence in the Australian economy in the face of the trade dispute.

He told AM while an escalation of the trade war was a concern, he hoped cool heads would prevail.

"We shouldn't overreact to these developments but we should recognise that China's currency moves and the increase in US tariffs are an unwanted escalation," he said.

"Right now, the Australian Government would like to see cool heads prevail."

The Treasurer also reaffirmed the Government's commitment to delivering a surplus despite international trade tensions.

"We'll still deliver a surplus next year, we're still determined to do that," he said.

"The Australian economy remains sound despite some of the challenges we face domestically and internationally."

Topics: government-and-politics, australia

First posted August 07, 2019 09:31:40

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US-China trade wars a 'serious' threat to Australian economy, expert warns

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Updated August 07, 2019 11:22:04 Australia faces a "very serious" threat as a deepening of the United States-China trade war highlights weaknesses in the domestic economy, according to a former prime ministerial adviser.

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This resource has some graphics with information in them as well as an interactive chart which demonstrates the trade deficit

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The U.S. trade deficit with China was $419 billion in 2018. The trade deficit exists because U.S. exports to China were only $120 billion while imports from China were $540 billion.

The biggest categories of U.S. imports from China were computers and accessories, cell phones, and apparel and footwear. A lot of these imports are from U.S. manufacturers that send raw materials to China for low-cost assembly. Once shipped back to the United States, they are considered imports.

From January 2018 to July 2018, the United States exported a total of $74.3 billion in goods to China. During that same timeframe, the U.S. imported $296.8 billion, according to the U.S. Census Bureau. As a result, the total trade deficit with China is $222.6 billion. A monthly breakdown is in the chart.

China can produce many consumer goods at lower costs than other countries can. Americans, of course, want these goods for the lowest prices. How does China keep prices so low? Most economists agree that China's competitive pricing is a result of two factors:

If the United States implemented trade protectionism, U.S. consumers would have to pay high prices for their "Made in America" goods. It's unlikely that the trade deficit will change. Most people would rather pay as little as possible for computers, electronics, and clothing, even if it means other Americans lose their jobs.

China is the world's largest economy. It also has the world's biggest population. It must divide its production among almost 1.4 billion residents. A common way to measure the standard of living is gross domestic product per capita. In 2017, China's GDP per capita was $16,600. China's leaders are desperately trying to get the economy to grow faster to raise the country's living standards. They remember Mao's Cultural Revolution all too well. They know that the Chinese people won't accept a lower standard of living forever.

China sets the value of its currency, the yuan, to equal the value of a basket of currencies that includes the dollar. In other words, China pegs its currency to the dollar using a modified fixed exchange rate. When the dollar loses value, China buys dollars through U.S. Treasurys to support it. In 2016, China began relaxing its peg. It wants market forces to have a greater impact on the yuan's value. As a result, the dollar to yuan conversion has been more volatile since then. China's influence on the dollar remains substantial.

China must buy so many U.S. Treasury notes that it is the largest lender to the U.S. government. Japan is the second largest. As of December 2018, the U.S. debt to China was $1.12 trillion. That's 28% of the total public debt owned by foreign countries.

Many are concerned that this gives China political leverage over U.S. fiscal policy. They worry about what would happen if China started selling its Treasury holdings. It would also be disastrous if China merely cut back on its Treasury purchases.

Why are they so worried? By buying Treasurys, China helped keep U.S. interest rates low. If China were to stop buying Treasurys, interest rates would rise. That could throw the United States into a recession. But this wouldn't be in China's best interests, as U.S. shoppers would buy fewer Chinese exports. In fact, China is buying almost as many Treasurys as ever.

U.S. companies that can't compete with cheap Chinese goods must either lower their costs or go out of business. Many businesses reduce their costs by outsourcing jobs to China or India. Outsourcing adds to U.S. unemployment. Other industries have just dried up. U.S. manufacturing, as measured by the number of jobs, declined 34% between 1998 and 2010. As these industries declined, so has U.S. competitiveness in the global marketplace.

President Trump promised to lower the trade deficit with China. On March 1, 2018, he announced he would impose a 25% tariff on steel imports and a 10% tariff on aluminum. On July 6, 2018, Trump's tariffs went into effect for $34 billion of Chinese imports. China canceled all import contracts for soybeans.

Trump's tariffs have raised the costs of imported steel, most of which is from China. Trump's move comes a month after he imposed tariffs and quotas on imported solar panels and washing machines. China has become a global leader in solar panel production. The tariffs depressed the stock market when they were announced.

The Trump administration is developing further anti-China protectionist measures, including more tariffs. It wants China to remove requirements that U.S. companies transfer technology to Chinese firms. China requires companies to do this to gain access to its market.

Trump also asked China to do more to raise its currency. He claims that China artificially undervalues the yuan by 15% to 40%. That was true in 2000. But former Treasury Secretary Hank Paulson initiated the U.S.-China Strategic Economic Dialogue in 2006. He convinced the People's Bank of China to strengthen the yuan's value against the dollar. It increased by 2% to 3% annually between 2000 and 2013. Former U.S. Treasury Secretary Jack Lew continued the dialogue during the Obama administration. The Trump administration continued the talks until they stalled in July 2017.

The dollar strengthened 25% between 2013 and 2015. It took the Chinese yuan up with it. China had to lower costs even more to compete with Southeast Asian companies. The PBOC tried unpegging the yuan from the dollar in 2015. The yuan immediately plummeted. That indicated that the yuan was overvalued. If the yuan were undervalued, as Trump claims, it would have risen instead.

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The Real Reason American Jobs Are Going to China

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The U.S. trade deficit with China was $419 billion in 2018. The trade deficit exists because U.S. exports to China were only $120 billion while imports from China were $540 billion. The biggest categories of U.S. imports from China were computers and accessories, cell phones, and apparel and footwear.

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US China Trade War Explained -Who Needs Who?

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A brief guide on the trade war between the world's two largest economies.

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Reserve Bank of Australia Governor Philip Lowe has warned the trade war between China and the US is the biggest single threat to the global economy.

Speaking at a private business dinner in Sydney, Dr Lowe warned the 2 to 3 per cent growth predicted for the Australian economy is at serious risk if the trade stoush escalates, reports The Sydney Morning Herald.

He spoke as some figures in the US urged President Donald Trump and its allies to increase the pressure on China.

"I do not have a clear idea of what strategy the US has. [Some people in the US] say that it is time for 'Team West' to muscle up against China and that is very worrying," Dr Lowe said.

The Trump Administration has raised concerns about China's approach to intellectual property rights, the purchase of overseas assets and the role of state funding.

The Australian economy is forecast to grow between 2 and 3 per cent unless the world economy worsens due to trade tensions.

Farmers felt the impact of its exposure to China yesterday when the rising super power doubled tariffs on Australian beef.

Increased demand from the Chinese middle classes saw Australian beef exporters exceed the yearly quota in under eight months.

Meanwhile, Prime Minister Scott Morrison has said Australia and the rest of the world will need to get used to the US-China trade war.

Speaking ahead of his visit to the G7 Summit in France this weekend, he offered a bleak assessment of progress in resolving the rift.

"I think we're going to have to get used to this for a while, this level of tension," Mr Morrison said.

"We've just got to accommodate that, we've got to absorb it, we've got to see the opportunities in it, of which there are many."

Mr Morrison said given China's economic success over the past few decades, it was time Beijing adhered to the same rules other countries faced.

© Nine Digital Pty Ltd 2019

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RBA chief worried trade war will damage economy

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Reserve Bank of Australia Governor Philip Lowe has warned the trade war between China and the US is the biggest single threat to the global economy. Speaking at a private business dinner in Sydney, Dr Lowe warned the 2 to 3 per cent growth predicted for the Australian economy is at serious risk if the trade stoush escalates, reports The Sydney Morning Herald.

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US President Donald Trump and Apple CEO Tim Cook met for dinner on Friday night. In an interview with reporters, Trump said the pair discussed the impact of tariffs on Apple's business.

Cook reportedly argued that it would be hard for Apple to pay tariffs on its Chinese-assembled products, because many of its competitors do not have to pay the same level of tariffs, namely Samsung, whose manufacturing is mostly located in South Korea ().

The Trump administration had planned to introduce 10% tariffs on many consumer goods on September 1, which would include Apple's biggest revenue driver - the iPhone.

However, last week, the government exempted some categories of products from the initial tariff imposition, including smartphones.

The introduction of import tariffs on products like the iPhone is currently delayed until December 15. This was good news for Apple, as it means the iPhone 11 launch in September will be unimpaired by tariff charges. Apple stock soared 5% on the news last week.

The September 1 tariffs will still affect many of Apple's other products, like AirPods, the HomePod, and some Macs.

Having dinner tonight with Tim Cook of Apple. They will be spending vast sums of money in the U.S. Great!

- Donald J. Trump (@realDonaldTrump) August 16, 2019

It seems like Trump was receptive to Cook's argument at their meeting. Trump told reporters, "I thought he made a very compelling argument."

Apple's investor base will be waiting to see if the iPhone can continue to evade tariff costs, and it's possible that the new December 1 date is further extended.

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Trump says Tim Cook made a 'compelling argument' that tariffs would impact Apple's ability to compete against Samsung - 9to5Mac

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US President Donald Trump and Apple CEO Tim Cook met for dinner on Friday night. In an interview with reporters, Trump said the pair discussed the impact of tariffs on Apple's business. Cook reportedly argued that it would be hard for Apple to pay tariffs on its Chinese-assembled products, because many of its competitors do ...