U.S. envoy urges response 'short of war' to Gulf tankers attack - Reuters

RIYADH/DUBAI (Reuters) - The U.S. ambassador to Saudi Arabia said Washington should take what he called “reasonable responses short of war” after it had determined who was behind attacks on oil tankers off the coast of the United Arab Emirates.

A technical staff is seen at the Port of Fujairah, United Arab Emirates, May 13, 2019. REUTERS/Satish Kumar

Iran was a prime suspect in the sabotage on Sunday although Washington had no conclusive proof, a U.S. official familiar with American intelligence said on Monday. Iran has denied involvement.

“We need to do a thorough investigation to understand what happened, why it happened, and then come up with reasonable responses short of war,” Ambassador John Abizaid told reporters in the Saudi capital Riyadh in remarks published on Tuesday.

“It’s not in (Iran’s) interest, it’s not in our interest, it’s not in Saudi Arabia’s interest to have a conflict.”

Four commercial vessels, including two Saudi oil tankers, were sabotaged on Sunday near Fujairah, one of the seven emirates of the UAE and a bunkering hub just outside the Strait of Hormuz. UAE authorities did not say who was behind the attack.

Distancing Tehran from the incident, Iran’s Foreign Ministry called it “worrisome and dreadful”.

Iran is embroiled in a war of words with the United States over sanctions and the U.S. military presence in the region.

Washington has increased sanctions on Tehran, saying it wants to reduce Iranian oil exports to zero, after quitting the 2015 nuclear pact between Iran and global powers last year.

The U.S. Maritime Administration said last week that Iran could target U.S. commercial ships including oil tankers sailing through Middle East waterways. Tehran has called the U.S. military presence “a target” rather than a threat.

U.S. Secretary of State Mike Pompeo shared information on what he called escalating threats from Iran during meetings with EU counterparts and the head of NATO in Brussels on Monday, the U.S. special representative for Iran Brian Hook said.

Hook declined to say whether he believed Iran played a role in the attacks off Fujairah or if Pompeo blamed Iran. He said the UAE had sought U.S. help in the investigation.

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Newspapers in the UAE, which are heavily controlled by the government, ran editorials urging caution in responding to the attack, which risks undermining the Gulf Arab state’s image as a regional bastion of stability and security.

“While further details are yet to emerge about this worrying incident, cool heads must prevail, and proper measures should be taken to ensure that this situation does not spin out of control,” wrote the editorial board of Abu Dhabi-based The National.

Gulf News, a state-linked Dubai daily, said “rogue actors must be brought to book”.

Saudi Arabia’s energy minister said on Monday that the attack aimed to undermine security of global crude supplies.

A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to markets in Asia, Europe, North America and beyond. The narrow waterway separates Iran from the Arabian Peninsula.

Oil prices were up slightly on Tuesday, though checked amid an escalation in the trade war between the U.S. and China.

Gulf Arab stock markets rebounded in early trading. The Saudi index was up 1.4 percent after two days of heavy losses and Dubai stock index was trading 2.4 percent higher after its biggest one-day loss in years on Monday.

U.S. President Donald Trump wants to force Tehran to agree a broader arms control accord and has sent an aircraft carrier and B-52 bombers to the Gulf in a show of force against what U.S. officials have said are threats to U.S. troops in the region.

Iran’s Revolutionary Guards, designated a terrorist organization by Washington, threatened last month to close the Hormuz chokepoint if Tehran was barred from using it.

Writing by Stephen Kalin, Editing by Angus MacSwan

Our Standards:The Thomson Reuters Trust Principles.

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2019-05-14 09:30:00Z
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North Korea Demands Return of Cargo Ship Seized by U.S. - The New York Times

SEOUL, South Korea — North Korea on Tuesday demanded the release of a ship impounded by the United States for evading international sanctions, calling the seizure a “flagrant act of robbery” that violated the spirit of the agreement reached last year between the North’s leader, Kim Jong-un, and President Trump.

American prosecutors say the North Korean ship, the Wise Honest, was used to export coal and import heavy machinery in violation of sanctions imposed on the North over its nuclear arms program. The ship was detained in Indonesian waters by the authorities there in April of last year, and its seizure by the United States was announced last week. The ship has since been taken to American Samoa.

“The United States’ action is an extension of its calculation aimed at subjugating us through the so-called maximum pressure and flatly denies the spirit of the June 12 Joint North Korea-U.S. Declaration where both sides agreed to build new relations,” the North Korean Foreign Ministry said in a statement, referring to the broad agreement reached between Mr. Trump and Mr. Kim at their first meeting, in Singapore.

“The United States must mull over what repercussions its gangster-like act will entail, and must return our vessel without delay,” the ministry said.

The seizure of the Wise Honest was the first time the United States had impounded a North Korean cargo vessel for alleged international sanctions violations. The Americans announced it soon after North Korea fired off two short-range missiles, its second such launch in five days.

Analysts said the North’s resumption of short-range missile tests was aimed at pressuring Washington to ease its stance on sanctions relief, after the collapse in February of the second summit meeting between Mr. Trump and Mr. Kim. Those talks, in Vietnam, ended early after Mr. Trump rejected Mr. Kim’s offer to dismantle one of its nuclear facilities in exchange for lifting the most painful sanctions. Mr. Trump insisted on a full dismantlement of its nuclear program.

North Korea is desperate to lift a series of United Nations Security Council sanctions imposed between 2016 and 2017. Unlike previous sanctions that targeted the North’s ruling elite, these penalties sought to strangle North Korea’s economy by banning all the country’s key exports, including coal, iron ore, textiles, fisheries and cheap workers. They also sought to drastically curtail North Korea’s ability to import fuel.

Mr. Kim has said he would abandon diplomatic engagement with the United States and find a “new way” of protecting his country’s national interests unless the United States changed course. He gave Mr. Trump until the end of the year to offer a new proposal for ending the nuclear crisis on the Korean Peninsula.

But the seizing of the Wise Honest indicated that the United States was redoubling its efforts to enforce the sanctions, particularly by cracking down on illegal ship-to-ship transfers of fuel and coal.

Analysts said the North’s recent short-range missile launches were meant to warn the United States that it would return to bolder missile tests unless the United States compromised on sanctions. They said the impounding of the Wise Honest provided North Korea with an excuse to escalate tensions that were already on the rise.

If North Korea resumes intermediate- and long-range ballistic missile tests, it will undermine Mr. Trump’s biggest diplomatic achievement in dealing with North Korea so far. The North has not launched a long-range missile since late 2017, something Mr. Trump has repeatedly cited as proof that his diplomacy was working.

In their broadly worded Singapore agreement, Mr. Trump and Mr. Kim promised to build a “new” relationship between the two nations and work toward the “complete denuclearization of the Korean Peninsula.”

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2019-05-14 06:56:06Z
CAIiENsUF2bg1_lUnrCWe-qO7jsqFwgEKg8IACoHCAowjuuKAzCWrzww5oEY

It's Trump vs. Xi in the China trade war -- and it's personal - CNN

A personal duel between two rival presidents could ensure that the escalating trade war across the Pacific may last longer than anyone expected.

The showdown is now no longer just a confrontation between China and the US -- one a rising power challenging the long established dominance of the global economic leader. It's become a test of wills between two of the world's most powerful men, each of whom has political interests that are more likely to deepen the conflict than to quickly ease it.

Both view themselves as strongmen. Both have imposed their power on their domestic governing systems by force of will. Both have the authority to trigger global shock waves -- as they did when markets plunged following Trump's tariff hikes last week and China's multi-billion dollar retaliation on Monday.

Both see the honor of their nation at stake at a crucial moment in the history of US-China relations, as the emerging competition between two great powers becomes sharper than ever.

While Trump has said the two sides were on the verge of a deal last week before China backed out, the gulf in intention between the two giant economies will complicate future talks.

Trump -- lambasting Chinese intellectual property theft and support for state industries -- believes he has to change the global trading system itself because it is a massive ripoff for the United States.

And Trump thinks the strength of the US economy gives him an edge and the ability to pin the blame for the impasse on Xi.

"We are right where we want to be with China. Remember, they broke the deal with us & tried to renegotiate," Trump tweeted on Sunday.

Xi sees US demands as an infringement on Chinese sovereignty and has an incentive to keep globalization intact since China has profited handsomely from the status quo in a stunning 20-year growth explosion.

The Chinese leader is no keener to climb down than Trump.

"China feels it does not have to give in," Max Baucus, a former US ambassador to China told CNN's Kate Bolduan on Monday.

"Add to that, saving face is a big deal in China. President Xi Jinping does not want to appear to have backed down. I don't think Americans understand that," the former Montana senator said.

While Trump said Monday he will talk to Xi at the G20 summit in Japan in late June -- which is now looming as a massively consequential meeting -- the gaps may be too wide to bridge by then.

Trump's ideology

One reason why the dispute could go on for a while is because Trump seems to sincerely believe he is winning.

Convinced of the primacy of the healthy US economy, willing to shrug off a day's losses on the stock market and wielding his favorite tariff tool, Trump is not at all fazed.

"We're in a very good position, and I think it's only going to get better," Trump said Monday.

Trump is often ideologically supple and could turn on a dime on the dispute. But he's held deep seated beliefs about China's economic threat for decades and has long advocated a protectionist remedy. This is one issue that he's shown that he really does believe in. After all, he seems ready to gamble on the health of the US economy -- his best political asset heading into his 2020 reelection race.

The President's hawkish comments on Monday might have been an attempt to calm tumbling markets. But they also entrenched a position from which it will be hard to abandon without being embarrassed.

For now at least, before damage to the economy and consumer budgets from the deepening trade war becomes obvious, Trump may believe he will prosper politically from standing up to China.

And after accusing Beijing of "raping" US workers in his 2016 campaign, he will want to make good on his promises before 2020.

Trump is also using the China confrontation to emphasize his contrast with former Vice President Joe Biden, the apparent 2020 Democratic front-runner.

Biden complained Monday that Trump was approaching the trade spat all wrong by showing "a lot of bravado, no action."

The President however has already charged that Biden is too weak to take on Xi -- and clearly enjoys the contrast.

"China is DREAMING that Sleepy Joe Biden, or any of the others, gets elected in 2020. They LOVE ripping off America!" Trump tweeted over the weekend.

Trump's big gamble

Trump's foreign policy bets are often motivated by a desire to shore up his domestic standing. And CNN recently reported that Trump is desperate to deliver on his self-image as a master deal maker, another reason it will be tough for him to fold.

The big political risk for the President is that a prolonged trade war of attrition begins to erode US growth, devalues 401ks in a market correction and tarnishes the economic feel good factor and undermines Trump's boasts of a new era of prosperity.

Voters could tire of paying an effective sales tax on goods like iPhones, toys and foodstuffs, despite Trump's assurance that China and not US consumers foot the bill for tariffs.

US exporters will take a hit from China's tariffs and US manufacturing will also suffer.

Rick Helfenbein, CEO of the American Apparel and Footwear Association, said his industry was "beyond freaked."

"(We are) sitting around feeling like we have just bought tickets for the second sailing of The Titanic, the only difference now is we know exactly where the icebergs are," Helfenbein said on CNN.

The pain of farmers already suffering from Chinese retaliatory tariffs -- especially those in the swing state Midwest -- could also deliver Trump a 2020 shock.

Punishing Beijing could also have other spillover effects. If China is slowed, other economies, including US export markets in Asia and Europe, could suffer and hurt US jobs and prosperity.

"If we get the full throttle of all tariffs it does risk a recession," Diane Swonk, chief economist of Grant Thornton, told CNN's Brooke Baldwin on Monday.

Such a doom-laden scenario is one reason why some analysts still bet Trump will close a deal after a period of posturing.

He has, after all, frequently escalated a crisis, then stepped back -- while declaring incremental changes to an existing agreement as a massive victory for the United States.

The scenario eventually eased the crisis over the renegotiation of the North America Free Trade Agreement and offers a blueprint for a deal at the G20 should Trump's political calculation over the China trade war change.

Xi's choice

The confrontation has already revealed a truth that reflects an important geopolitical evolution: Beijing is not afraid of the United States.

Trump spent the weekend warning China on Twitter that it would be "hurt very badly" if it didn't do a deal.

By Monday morning, he had his answer when Beijing announced plans to raise tariffs on $60 billion in US goods.

Like Trump, Xi is not immune to political pressures.

Although he is the most dominant Chinese leader in decades, he cannot completely ignore complicated internal Communist Party dynamics. Chinese leaders are always wary of any changes to social conditions -- that could be brought on by a slowing economy -- that could cause public resentment and translate into political activity.

China is also sensitive to its own experience under colonialism and proud of its rise as a key regional power and global player. So there is no circumstance under which Xi could allow himself to be seen as bowing to bullying from any Western leader, let alone an American president as combative as Trump.

The importance of Chinese pride in the dispute was reflected in an article in the People's Daily, the Communist Party mouthpiece on Monday. The paper accused the US of misjudging China's "strength, capability and willpower" and of taking a "risky and impetuous decision."

Baucus said that Americans underestimated China's size, power and leverage. He also said that Beijing was playing a far longer game than Washington and, with the leadership's iron grip on dissent, could afford to absorb the painful side effects of a trade war.

"I think those who think the US (has) leverage do not really fully understand China. China thinks long term. China is an authoritarian government. Their party controls everything," he said.

Both Xi and Trump know the other has much to lose. The question now is the age old diplomatic conundrum: Can they forge an outcome that gives both the option to declare victory?

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https://www.cnn.com/2019/05/14/politics/donald-trump-xi-jinping-china-trade-war/index.html

2019-05-14 05:41:00Z
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China Retaliates Against the U.S. With Its Own Higher Tariffs - The New York Times

BEIJING — China moved to retaliate against the United States, announcing plans on Monday to raise tariffs on American goods ranging from beer and wine to swimsuits, shirts and liquefied natural gas.

The decision, which follows President Trump’s increase in tariffs on Chinese goods last Friday, escalates the pressure in the ongoing trade war.

Trade talks between the two sides broke down last week without a deal, causing tensions that have rippled through financial markets and the global economy. American stocks plunged on Monday, extending the recent losses.

Beijing’s retaliation comes at a time when many in China feel that the United States has behaved highhandedly in threatening tariffs. “Mutual trust and respect are of the essence in handling the negotiations,” said Zhu Ning, a Tsinghua University economics professor.

It isn’t clear whether China’s retaliation would end with the tariff increases. In the past, China has slowed imports at customs and launched investigations into foreign companies during times of tension.

Hu Xijin, editor of the Global Times, a tabloid owned by the Chinese Communist Party, tweeted on Monday evening that he was expecting broader retaliation, including halting purchases of American agricultural and energy products, reducing orders for Boeing aircraft and possibly even the sale of part of China’s large holdings of Treasuries.

The last of these threats once unnerved markets but has since lost some of its edge. China has been diversifying for the past decade where it parks its money, and had to spend a quarter of its huge hoard of foreign currency reserves three years ago to stem a decline in its currency.

China’s finance ministry announced on Monday evening that it was raising tariffs on a wide range of American goods to 20 percent or 25 percent from 10 percent. But the ministry delayed implementation until June 1.

The delay will allow time for negotiators to make one last push for a deal. It roughly matches a delay that the Trump administration put on its own tariff increase.

President Trump on Friday raised tariffs on $200 billion a year worth of Chinese goods, particularly auto parts, to 25 percent from 10 percent. He had already imposed 25 percent tariffs last summer on another $50 billion a year of Chinese goods, including a wide range of products that his administration views as strategic, from cars to aircraft parts and nuclear reactor components.

The Trump administration has more tariffs planned. The Office of the United States Trade Representative has said that on Monday, it will issue for public comment at Mr. Trump’s direction a proposal to raise tariffs on “essentially all remaining imports from China, which are valued at approximately $300 billion.”

Because China’s entire imports from the United States are considerably less than $200 billion, it has not had the option of matching the United States dollar for dollar. Last September, China had matched President Trump’s 10 percent tariffs on $200 billion a year in goods with its own tariffs of 5 percent to 10 percent on $60 billion a year in American goods.

On Monday, China’s ministry of finance raised those tariffs by introducing four new categories for the $60 billion in goods. The tariffs on those four categories are 25 percent, 20 percent, 10 percent and 5 percent.

The finance ministry did not specify the dollar value of goods in each of the four categories. But the largest number of tariff codes in the $60 billion was assigned to the 25 percent category, suggesting that China was raising the tariffs on many imports to that level.

China’s tariff increases on Monday included raising the tariff on liquefied natural gas imports from the United States to 25 percent from 10 percent. That could hurt Texas, Oklahoma and Louisiana, three states with a lot of Trump supporters.

By contrast, China left unchanged at 5 percent its tariffs on about a tenth of the product categories in the $60 billion. These included its tariffs on imports of American tires, light bulbs and certain paper products.

Neither the American tariffs nor China’s retaliation will go into effect right away. Despite the rising tensions, the Trump administration structured its tariff increase on Friday so that it won’t take effect for a few weeks, giving both sides a bit more room to reach a deal. In a departure from the usual practice of assessing tariffs on goods based on the date when they reach American seaports and airports, the Trump administration declared that the increased tariffs on $200 billion a year in goods would be applied only to shipments that left China from Friday onward.

Goods that travel by sea take two to four weeks to reach the United States from China, depending mainly on whether the ship sails to the East or West Coast and how fast the ship travels. That means the effect won’t be felt for a few weeks except for the small share of goods moving by air.

Chris Rogers, a trade analyst at Panjiva, a trade data firm, said that roughly 90 percent of all American imports from China come by sea, and the rest by air. An even higher proportion of the $200 billion in goods being hit by the latest tariff increase is likely to come by sea, he said, because the higher tariffs do not cover big categories like iPhones that come to the United States almost entirely by air.

There is also a practical reason for the Trump administration not to have imposed the tariff increase right away: Updating customs procedures can be slow. The Trump administration “wanted to start the clock but be realistic about implementation,” said James Green, the top trade official at the United States embassy in Beijing until August and now a senior adviser at McLarty Associates, a Washington consulting firm.

The question now is whether another round of tit-for-tat tariff increases portends an economic struggle between the United States and China that could last for many years. Since President Trump was elected, the two sides have repeatedly seemed close to a deal only for it to fall apart. Commerce Secretary Wilbur Ross seemed to have the outlines of a deal in 2017. Treasury Secretary Steven Mnuchin talked of a deal being at hand a year ago.

President Trump himself was upbeat about the prospects for a deal last month. Chinese officials have been consistently encouraging about progress toward a deal for the past two years, even though a hardening of China’s stance last week appears to have contributed to Mr. Trump’s decision this week to raise tariffs.

Last week’s round of talks in Washington is the 11th time that senior Chinese and American officials have met to discuss trade since President Trump took office. “What should be concerning to markets is how close both sides have gotten to a deal before one side backs off,” something that has happened again and again, said Hannah Anderson, a global markets strategist in the Hong Kong office of J.P. Morgan Asset Management.

Global markets fell on Monday, and the renminbi, China’s currency, also fell half a percent against the dollar. Goldman Sachs revised its forecast for the currency’s value, to 6.95 to the dollar three months from now, instead of the 6.65 it had been expecting.

Falls in the Chinese currency make Chinese goods more competitive in foreign markets, including Europe’s as well as the United States. But a weakening renminbi also creates an incentive for Chinese companies and households to try to evade China’s controls on international money movements and shift large sums out of the country, which could undermine the stability of China’s financial system.

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2019-05-13 14:51:57Z
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Polls close in Philippines vote seen as referendum on Duterte - Aljazeera.com

Manila, Philippines - Voting has closed in Philippines' election for legislators and local executives that is expected to strengthen President Rodrigo Duterte's hold on power halfway into his term.

More than 61 million Filipinos are registered to vote in the midterm polls, with roughly 43,000 candidates vying for some 18,000 government posts.

"It was fairly easy and convenient," John Binalla, a young IT employee, said after casting his vote at a public elementary school in Mandaluyong City, a suburb of the capital, Manila.

The Commission on Elections declared the voting to have been “generally successful” and without major problems all over the country of more than 7,000 islands. It did report that at least 400 of some 85,000 computerised ballot scanners encountered glitches.

The highest positions at stake are 12 seats in the Senate to recompose half of the higher congressional chamber already dominated by senators allied or supportive of Duterte's administration.

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Voter preference surveys by private pollsters predict a favourable outcome for the administration, with its senatorial candidates poised to win up to two-thirds of the contested seats.

Although mostly supportive of Duterte, the current Senate has so far tempered his more polarising objectives, such as reinstating the death penalty or redrafting the constitution to change the form of government from unitary to federal - a move that may allow Duterte to stay in power indefinitely.

Critics have expressed fears that a victory for Duterte's allies would reduce the Senate's independence and prevent it from keeping a check on the president, whom they expect to further push for his platforms as his single six-year term enters its home run.

"Clearly, there are few who make a stand in the government nowadays," said Senator Leila de Lima, jailed on illegal drug charges after she ran an investigation on thousands of killings in Duterte's "war on drugs".

"Our institutions lack voices for justice and truth. Many fear persecution and choose to kowtow just to stay in power," she said in a statement on Monday.

One of only four incumbent opposition senators, de Lima urged voters to "reject the liars, the corrupt, the plunderers".

This was a clear jab at Duterte's senatorial slate, which includes two former senators charged with plunder and a daughter of the late dictator Ferdinand Marcos.

Track record

The candidates' track record were among key issues on voters' minds.

"I really looked at the candidates' status. Some of them have a really bad record so we have to be careful about that,” said Rolly Mabunga, an employee based in Manila.

"To me, what's most important is they have experience to show for," he added.

Voters are choosing senators from among Duterte's broad coalition of allies from different political parties, a bloc of eight opposition figures and a slew of independent candidates who are not backed by either the administration or the opposition.

Aside from questioning Duterte's choice of senatorial candidates, the "Otso Diretso" or "Eight Straight" opposition bloc focused their campaign criticising Duterte's China-friendly policies in light of Beijing's occupation of areas in the South China Sea within the Philippines' exclusive economic zone, and demanded accountability for drug war killings, which some watchdogs said have reached more than 20,000.

However, the opposition bloc appears unlikely to win many Senate seats. The latest voter preference survey indicated only one of them will probably succeed: Bam Aquino, a cousin of former President Benigno Aquino.

Analysts say that despite fierce criticism of Duterte's administration, the opposition bloc's campaign failed to sway most voters, who are still counting on the president's promise of "change" in terms of alleviating poverty and combatting criminality.

"The current administration has accomplished things. Duterte has political will and the country needs it," voter Rolly Mabunga told Al Jazeera.

He said he chose a mix of administration, opposition and independent candidates. "It would be nice to have checks-and-balances in the Senate, to make sure ongoing projects continue but without corruption or anomalies."

Mabunga said he favoured Duterte's "war on drugs" but it needs to be done lawfully and follow due process instead of randomly arresting and killing suspects.

For her part, Nerisa Jimenez, a government employee, said she backed candidates who had already passed laws as legislators, while others, such as John Binalla and his mother, Dale, said they were wary of candidates with a long history in politics.

"We don't want candidates from political dynasties or those who support that plan to shift to federalism,” Dale Binalla, a businesswoman, told Al Jazeera.

"We ran a thorough check on their platforms and backgrounds. Some of them said they opposed political dynasties but were themselves members of such dynasties," John Binalla added.

Filipinos voting at a polling centre in Manila [Aaron Favila/AP]

"I've seen many elections and the same names and faces keep coming up," said Jerry Somao-i, an unemployed man who flew from the country's southern Surigao province to cast his vote in Manila, where he is registered as a voter, only to find out his account has been deactivated since he missed the last election of village leaders.

"I would have voted for the new ones. Unfortunately, it seems I won't be able to," Somao-i told Al Jazeera.

The Commission on Elections has opened a 24-hour help desk to assist voters with such concerns, as well as to report anomalies they might encounter.

The commission strongly cautioned voters against operators from candidates who would offer to pay them for their votes.

"Vote-buying" is one of the most serious concerns in the Philippines' electronically-automated elections. The electoral commission has reported dozens of such cases even before the polls opened, and it said many more instances go undetected.

Candidates proven to have attempted to buy votes are charged with a grave election offence, jailed and disqualified from public office. However, very few cases are brought to justice.

Initial results are expected within hours after polls close, and the winners will be officially declared in the coming weeks.

The last midterm election, in 2013, yielded a 77 percent voter turnout.

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2019-05-13 14:23:00Z
CBMib2h0dHBzOi8vd3d3LmFsamF6ZWVyYS5jb20vbmV3cy8yMDE5LzA1L3BoaWxpcHBpbmVzLW1pZHRlcm1zLXZvdGVycy1oZWFkLXBvbGxzLXRlc3QtZHV0ZXJ0ZS0xOTA1MTIyMzMyMDY0NzkuaHRtbNIBc2h0dHBzOi8vd3d3LmFsamF6ZWVyYS5jb20vYW1wL25ld3MvMjAxOS8wNS9waGlsaXBwaW5lcy1taWR0ZXJtcy12b3RlcnMtaGVhZC1wb2xscy10ZXN0LWR1dGVydGUtMTkwNTEyMjMzMjA2NDc5Lmh0bWw

China Retaliates Against the U.S. With Its Own Higher Tariffs - The New York Times

BEIJING — China moved to retaliate against the United States, announcing plans on Monday to raise tariffs on a wide range of American goods.

The decision, which follows President Trump’s increase in tariffs on Chinese goods last Friday, escalates the pressure in the ongoing trade war.

Trade talks between the two sides broke down last week without a deal, tensions that have rippled through the markets and the economy. American stocks plunged on Monday, extending the recent losses.

Beijing’s retaliation comes at a time when many in China feel that the United States has behaved highhandedly in threatening tariffs. “Mutual trust and respect are of the essence in handling the negotiations,” said Zhu Ning, a Tsinghua University economics professor.

It isn’t clear whether China’s retaliation could end there. In the past, China has slowed imports at customs and launched investigations into foreign companies during times of tension.

Hu Xijin, editor of the Global Times, a tabloid owned by the Chinese Communist Party, tweeted on Monday evening that he was expecting broader retaliation, including halting purchases of American agricultural and energy products and Boeing aircraft or selling some of China’s large holdings of Treasuries. That latter threat once unnerved markets but has since lost some of its edge, as China has been trying to diversify where it parks its money for years and had to spend some of its huge hoard of foreign currency reserves three years ago to stem a decline in its currency.

China’s finance ministry announced on Monday evening that it was raising tariffs on a wide range of American goods to 20 percent or 25 percent from 10 percent. But the ministry delayed implementation until June 1.

The delay will allow time for negotiators to make one last push for a deal. It roughly matches one that the Trump administration put on its own tariff increase.

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President Trump on Friday raised tariffs on $200 billion a year worth of Chinese goods, particularly auto parts, to 25 percent from 10 percent. He had already imposed 25 percent tariffs last summer on another $50 billion a year of Chinese goods, including a wide range of products that his administration views as strategic, from cars to aircraft parts and nuclear reactor components.

The Trump administration has more tariffs planned. The Office of the United States Trade Representative has said that on Monday, it will issue for public comment at Mr. Trump’s direction a proposal to raise tariffs on “essentially all remaining imports from China, which are valued at approximately $300 billion.”

Because China’s entire imports from the United States are considerably less than $200 billion, it has not had the option of matching the United States dollar for dollar. Last September, China had matched President Trump’s 10 percent tariffs on $200 billion a year in goods with its own tariffs of 5 percent to 10 percent on $60 billion a year in American goods.

On Monday, China’s ministry of finance raised those tariffs by introducing four new categories for the $60 billion in goods. The tariffs on those four categories are 25 percent, 20 percent, 10 percent and 5 percent.

The finance ministry did not specify the dollar value of goods in each of the four categories. But the largest number of tariff codes in the $60 billion was assigned to the 25 percent category, suggesting that China was raising the tariffs on many imports to that level.

China’s tariff increases on Monday included raising the tariff on liquefied natural gas imports from the United States to 25 percent from 10 percent. That will hurt Texas, Oklahoma and Louisiana, three states with a lot of Trump supporters.

By contrast, China left unchanged at 5 percent its tariffs on about a tenth of the product categories in the $60 billion. These included its tariffs on imports of American tires, light bulbs and certain paper products.

Neither the American tariffs nor China’s retaliation will go into effect right away. Despite the rising tensions, the Trump administration structured its tariff increase on Friday so that it won’t take effect for a few weeks, giving both sides a bit more room to reach a deal. In a departure from the usual practice of assessing tariffs on goods as they reach American seaports and airports, the Trump administration declared that the increased tariffs on $200 billion a year in goods would be applied only to shipments that left China from Friday onward.

Goods that travel by sea take two to four weeks to reach the United States from China, depending mainly on whether the ship sails to the East or West Coast and how fast the ship travels. That means the effect won’t be felt for a few weeks.

Chris Rogers, a trade analyst at Panjiva, a trade data firm, said that roughly 90 percent of all American imports from China come by sea. An even higher proportion of the $200 billion in goods being hit by the latest tariff increase is likely to come by sea, he said, because the higher tariffs do not cover big categories like iPhones that come to the United States almost entirely by air.

There is also a practical reason for the Trump administration not to have imposed the tariff increase right away: Updating customs procedures can be slow. The Trump administration “wanted to start the clock but be realistic about implementation,” said James Green, the top trade official at the United States embassy in Beijing until August and now a senior adviser at McLarty Associates, a Washington consulting firm.

The question now is whether another round of tit-for-tat tariff increases portends an economic struggle between the United States and China that could last for many years. Since President Trump was elected, the two sides have repeatedly seemed close to a deal only for it to fall apart. Commerce Secretary Wilbur Ross seemed to have the outlines of a deal in 2017. Treasury Secretary Steven Mnuchin talked of a deal being at hand a year ago.

President Trump himself was upbeat about the prospects for a deal last month. Chinese officials have been consistently encouraging about progress toward a deal for the past two years, even though a hardening of China’s stance last week appears to have contributed to Mr. Trump’s decision this week to raise tariffs.

Last week’s round of talks in Washington is the 11th time that senior Chinese and American officials have met to discuss trade since President Trump took office. “What should be concerning to markets is how close both sides have gotten to a deal before one side backs off,” something that has happened again and again, said Hannah Anderson, a global markets strategist in the Hong Kong office of J.P. Morgan Asset Management.

Global markets fell on Monday, and the renminbi, China’s currency, also fell half a percent against the dollar. Goldman Sachs revised its forecast for the currency’s value, to 6.95 to the dollar three months from now, instead of the 6.65 it had been expecting.

Falls in the Chinese currency make Chinese goods more competitive in foreign markets, including Europe’s as well as the United States. But a weakening renminbi also creates an incentive for Chinese companies and households to try to evade China’s controls on international money movements and shift large sums out of the country, which could undermine the stability of China’s financial system.

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https://www.nytimes.com/2019/05/13/business/trump-trade-china.html

2019-05-13 14:07:38Z
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Dow tumbles 475 points after China retaliates with higher tariffs - CNN

China hiked tariffs on $60 billion of imports from the United States. It first imposed the tariffs last year.

Worries over the escalation of the trade spat with China just aren't going away.

US stocks opened sharply lower. The S&P 500 (SPX) fell 1.7% and the Nasdaq (COMP) dropped 2.1%. The Dow fell more than 475 points at the open.

Last week, tensions escalated between Washington and Beijing, starting with a tweet from President Donald Trump on Sunday, May 5. Trump threatened further tariffs on Chinese imports, and his administration followed through on Friday, when it raised tariffs to 25% from 10% on some $200 billion worth of imported goods from China. The additional tariffs are not expected to affect goods already in transit, which buys negotiators a new negotiation window.

Stocks recovered on Friday after Trump and Treasury Secretary Steven Mnuchin called last week's talk with Chinese negotiators "constructive." Still, the Dow ended the week 2.1% lower, making its worst week since March.

Over the weekend, Trump tweeted extensively about the trade spat, calling US companies to produce goods domestically to avoid tariffs and that a trade deal will get worse for China if negotiations dragged on past the presidential election in 2020. He also reiterated that Beijing "broke the deal".

Trump also partly attributed the first quarter US GDP growth of 3.2% to his tariff strategy.

White House economist adviser Larry Kudlow said on Sunday the US expected retaliation from China over the new tariffs.

China will "never yield to external pressure" and is determined to protect its rights, said Geng Shuang, a spokesperson for the Ministry of Foreign Affairs on Monday.

European stocks were lower across the board. Asian markets closed lower, with the Shanghai Composite (SHCOMP) ending Monday trading down 1.2%.

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https://www.cnn.com/2019/05/13/investing/dow-stocks-today/index.html

2019-05-13 13:33:00Z
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