United States and China trade talks making the most significant progress - Photo: Special

JAKARTA (TheInsiderStories) – China announced that it would be forced to take necessary countermeasures if United States (US) moves forward with tariffs set to take effect Sept. 1, continuing the back-and-forth escalation of the trade war even as the conflict elevates fears of a global economic slowdown.

“China has to take necessary countermeasures in response to the US announcement of imposing additional 10 percent tariffs on 300 billion US dollars of Chinese imports”, an official with the Customs Tariff Commission of the State Council said Thursday (08/15).

Earlier this week, in a rare moment of easing, US President Donald Trump announced that tariffs on certain consumer goods would be postponed until mid-December to spare consumers and companies some of the added costs during the holiday shopping season.

It marked Trump’s first public acknowledgment that Americans shoulder the burden from his tariffs, although in tweets the President also said the move “actually helps China more than us” and claimed China would reciprocate.

“Good things were stated on the call with China the other day. They are eating the Tariffs with the devaluation of their currency and “pouring” money into their system. The American consumer is fine with or without the September date, but much good will come from the short deferral to December,” the President tweeted.

“It actually helps China more than the US but will be reciprocated. Millions of jobs are being lost in China to other non-Tariffed countries. Thousands of companies are leaving. Of course, China wants to make a deal. Let them work humanely with Hong Kong first,” he adds.

But the Chinese response Thursday showed that Beijing was not appeased by the delay.

“The move by the US seriously violated the consensus reached between the two heads of state in Argentina and Osaka, and deviates from the right track of resolving differences through consultation,” the Customs Tariff Commission of the State Council said in a statement. “China will have to take necessary countermeasures.”

Markets around the world slumped after China’s announcement. In the US, stocks vacillated between gains and losses, with the Dow Jones industrial average rising about 100 points, or .4 percent, by the closing bell, AP reported.

Chinese officials offered no further details as to what form countermeasures might take, or whether their trade negotiators would still be coming to the US to continue talks in September.

But the message shows China is prepared to dig its heels in, even as it grapples with political protests in Hong Kong and a raft of disappointing economic data. Earlier this week, China reported levels of high unemployment, as factory output fell to a 17-year low, showing the breadth of the nation’s economic slowdown.

In the US, similar omens are looming. For the first time since the run-up to the Great Recession, the yields — or returns — on short-term US bonds eclipsed those of long-term bonds. This phenomenon, which suggests investor faith in the economy is faltering, has preceded every recession in the past 50 years.

The panic caused the Dow Jones industrial average to shed about 800 points Wednesday, in its biggest single-day drop of 2019. Stocks bounced around most of Thursday, a reflection of investor uncertainty over the competing issues of China trade, the global bond market, and an expanding US economy.

By the end of the day, there was not that much change from when the session started. There was some help from a robust report on July retail sales from the Commerce Department. The Labor Department also reported that US productivity rose 2.3 percent in the second quarter.

The Dow and Standard & Poor’s 500 indexes both settled slightly to the upside but far from clawing back Wednesday’s losses. Shares of retail giant Walmart spearheaded the blue chips, rising 6.11 percent on a better-than-expected earnings report. The S&P finished up the day at 2,847, a gain of 7 points or 0.25 percent. The Nasdaq composite was the only down-note, but it was still close to break-even at 7,766, a 7-point loss.

“Walmart, a great indicator as to how the US is doing, just released outstanding numbers. Our Country, unlike others, is doing great! Don’t let the Fake News convince you otherwise,” he said.

Signs of the trade war’s toll are surfacing not just in the US and China but all over the globe. Central bank leaders in Europe, Asia, and Australia have announced interest rate cuts in recent weeks, attributing the need for economic stimulus to the fallout from the trade war.

And on Wednesday, Germany announced that its export-driven economy had shrunk .1 percent between April and June, and officials blamed the drop-off on the fallout from the trade war and the looming threat of a hard Brexit by Britain. With another contraction this quarter, Germany would officially be in a recession.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com