The US Trade Representative formally announced the product list of around USD 300B of Chinese imports for an additional ad valorem duty of up to 25 percent. The list “covers essentially all products not currently covered” by Section 301 tariffs on China. Though the list excludes “pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals. ”

Public comments are invited up till June 17, when hearing will be held in the main hearing room of the US . International Trade Commission. Final rebuttal comments are due seven days after the end of the hearing. The duration of consultation is notably shorter than before. 71 days was used last year for tariffs on USD 200B of Chinese goods. 42 days would be spend for the current round.

Full list of products here.

Some American farmers are clearly frustrated with the way Trump handles trade negotiation with China. American Soybean Association shouted loud and clear in a statement that “Soy Growers Are Fed Up with Tariffs”. The ASA “cannot support continuing and escalating the use of tariffs” but the US would with “like-minded countries” to pursue the negotiation goal with China.

ASA President Davie Stephens criticized that US has been at table with China 11 times and “still has not closed the deal”. He added: “What that means for soybean growers is that we’re losing. Losing a valuable market, losing stable pricing, losing an opportunity to support our families and our communities. These trade negotiations are serious for us. Farming is our livelihood.”

Stephens added: “The soybean market in China took us more than 40 years to build, and as this confrontation continues, it will become increasingly difficult to recover. With depressed prices and unsold stocks expected to double by the 2019 harvest, soybean farmers are not willing to be collateral damage in an endless tariff war,”

John Heisdorffer, ASA Chairman, warned further to warn that “we cannot withstand another year in which our most important foreign market continues to slip away and soybean prices are 20 to 25 percent, or even more, below pre-tariff levels”. “The sentiment out in farm country is getting grimmer by the day. Our patience is waning, our finances are suffering, and the stress from months of living with the consequences of these tariffs is mounting”, he added

Full statement here.

In the Oval Office, Trump expressed his optimism on US-China trade negotiation despite current escalation in trade war,  and announced new plan to aid farmed affected.

Trump reiterated that the negotiations were 95% done when China suddenly backtracked on its commitments. And, the US cannot let China continue to take advantage on trade. But he on further talks, he added “we’ll let you know in about three or four weeks whether of not it was successful. … But I have a feeling it’s going to be very successful”. Regarding the new round of tariffs on USD 325B in Chinese imports, Trump sounded non-committal and said he hasn’t made a decision yet.

He went further to once again hailed his “very good relationship” with Xi and indicate there could be a meeting soon. He said: “Maybe something will happen. We’re going to be meeting, as you know, at the G20 in Japan and that’ll be, I think, probably a very fruitful meeting.”

Additionally, Trump indicated the administration was planning a second round aids to farmers, at around USD 15B due to trade war. He said “we’re going to take the highest year, the biggest purchase that China has ever made with our farmers, which is about $15 billion, and do something reciprocal to our farmers so our farmers can do well.” And, “Out of the billions of dollars that we’re taking (tariffs), a small portion of that will be going to our farmers, because China will be retaliating, probably to a certain extent, against our farmers.”

China official announced retaliation to US tariffs hikes from 10% to 25% on USD 200B in Chinese import effective on May 9.

In a statement of the Office of the Customs Tariff Commission of the State Council, China criticized that the above move by the US “led to an escalation of economic and trade frictions, which violates the consensus of China and US to resolve trade differences through consultations”. And, that “harms the interests of both sides and does not meet the general expectations of the international community.”

The Commission announced to “adjust” and raise current tariffs on US imports, effect June 1. For the list of USD 60B tariffs US products, rate will be raised to 25%, 20% or 10%. For those products at 5% tariffs, the rate will be maintained.

Looking at the details, a total of 5140 lines of US products will be affected. Among them, additional 25% will imposed of 2493 lines, additional 20% will be on 1078 lines

Full statement (in Simplified Chinese).

US-China trade war is the major, if not the only, theme today. Trump “demonstrated” his threat to China by warning the latter not to retaliate with his tweets. Whether Twitter is blocked in China or not, we believe that it’s a known (including Trump) that Xi doesn’t read it. Anyway, China is said to hit back on tariffs on some USD 60B in US import, with tariffs ranging from 5-25%, effect June 1.

Global stock markets suffer steep selloff today as there is only one way to go for US and China, further escalation in trade and diplomatic tensions. In particular, DOW future is down -400pts as US stocks are set to open sharply lower. 10-year yield is currently down -0.043 at 2.425 and 3-month to 10-year yield inversion is back. China Shanghai SSE just lost -1.21% and defended 2900 handle. But Yuan selloff is accelerating with USD/CNH breaking 6.9 handle.

In the currency markets, Australian Dollar leads other commodity currencies down. Swiss Franc and Yen are the strongest ones. In particular, USD/JPY breaks 109.47 temporary low to resume recent decline. USD/CHF also breaks 55 day EMA decisively. Both are near term bearish developments.

In Europe, currently:

• FTSE is down -0.25%.
• DAX is down -1.00%.
• CAC is down -0.76%.
• German 10-year yield is down -0.009 at -0.051.

Earlier in Asia:

• Nikkei dropped -0.72%.
• Hong Kong was on holiday.
• China Shanghai SSE dropped -1.21% to 2903.71.
• Singapore Strait Times dropped 1.20%.
• Japan 10-year JGB yield dropped -0.0008 to -0.046.

Trump continues to “demonstrate” his verbal threats to China with his tweets. He claimed that of the 25% tariffs, only “4 points were paid by the US”. “21 points” will be paid by China because it “subsidizes product to such a large degree”. And, people can by products “inside the USA”. Tariffs companies will be “leaving China for Vietnam and other such countries in Asia.

He also claimed that “there will be nobody left in China to do business with” and that’s “very bad for China, very good for USA”. He warned that “China should not retaliate – will only get worse!”. Also, Trump told Chinese President Xi “you had a great deal, almost completed & you backed out”.

Trump also claimed that the unexpected 3.2% GDP growth was “greatly helped by tariffs fro China”.

By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet

Always unblock Twitter Tweets

By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet

Always unblock Twitter Tweets

By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet

Always unblock Twitter Tweets

By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet

Always unblock Twitter Tweets