US: Trade tensions with China to linger on? – Rabobank

Analysts at Rabobank suggest that US-Sino trade isn’t willing to give the floor fully to these new European concerns as the US President Trump announced that the US will be levying tariffs against China after all, on USD 50bn worth of Chinese goods that contain “industrially significant technology”.

Key Quotes

“In addition, restrictions on Chinese investments will be announced on 30 June. This move is somewhat of a surprise since the US and China have been in talks about reaching a trade deal, which appeared to be progressing well. Perhaps President Trump caved to the mounting criticism on the contents of the agreement. Either way, the chances of no tariffs being raised at all seem slimmer at this point.”

“China has limited time to react before tariffs are imposed on 15 June and the question is what leverage China can and will use. Trump’s focus on China’s high tech industry leaves less room for a compromise from China. Additionally, Trump may feel that he doesn’t need China in order to make progress on talks with Kim Jong Un, which might have one of the reasons why he was open to trade talks with China in the first place.”

“Overall, this move puts a trade war scenario back on the agenda, although it is also quite possible that there will only be one round of tariffs between the US and China, after which a deal is still reached.”