How a US-China trade war could hurt us all
Karishma Vaswani
Asia business correspondent
@BBCKarishma on Twitter
5 July 2018
Both sides may ramp up the rhetoric to such an extent neither can back down
What happens when the world's two biggest economies go to war?
Ok, so it's not a real war - but the US and China are at the beginning of a trade war - and no-one knows just how bad it could get.
So here's how a US-China trade war could hurt us.
Tit-for-tat
A list of Chinese products will be hit with a 25% tariff from Friday - effectively making them 25% more expensive for US consumers.
Technology goods like semiconductor chips assembled in China. They're found in consumer products used in everyday life such as televisions, personal computers, smartphones, and cars
A wide variety of products ranging from plastics, nuclear reactors and dairy-making equipment
According to the Petersen Institute of International Economics more than 90% of the products on the US tariffs list are made up of intermediate inputs or capital equipment. That means stuff that you need as raw material to make other products - so it could have a knock-on effect on many other goods too.
What the US really wants to target though are things produced under China's Made in China 2025 policy.
In retaliation to the US moves, China has hit these sectors:
American agriculture - hitting at American farmers and ranchers, a political vote bank that US President Trump relies on. Some 91% of the 545 products China is placing a tariff on are from the agriculture sector
The car sector - companies such as Tesla and Chrysler manufacture in the US and their products going into China would be affected
Medical products; coal; petroleum (but only marginally).
'Getting scary'
And while Beijing is really good at the chest-thumping, fist-wagging rhetoric, the reality on the ground is much more serious.
What is Beijing planning with its "Made in China 2025" programme?
"Our industry contacts in China have said things like 'seems pretty serious,' or 'this is getting scary', even 'I think there's a chance of things getting worse'," says Vinesh Motwani of Silk Road Research.
He's recently returned from a trip to the mainland, and as part of his research routinely talks to China-based firms to gauge business sentiment there.
These worries, he says, can translate into "increased caution and lower confidence" for businesses as they try to navigate the uncertainty ahead.
Which means: expansion plans could be put on ice. And if Chinese expansion is on hold that has a direct impact on the rest of us in Asia.
Shift manufacturing?
Obviously the US and China's economies are most at risk, although they're not the only ones.
According to DBS's chief economist Taimur Baig, an all-out trade war could shave 0.25% off the GDP of both economies this year. It gets much worse next year - with both countries seeing a reduction in growth of about 0.5% or more.
Mr Baig adds that "considering China grows at 6-7% and the US at 2-3%, we believe the damage would be greater to the US than on China".
But countries like South Korea, Singapore and Taiwan could all be affected too because of disruption to supply chains.
Why the US-China trade war will hit most of our pockets
China sources a lot of components that go into its finished goods from these other countries. As Nick Marro of the Economist Intelligence Unit points out, "any dent in China's export flows will inevitably affect" these other countries.
The case could be made for manufacturing to shift to these other countries - and for them to take advantage of selling to the US - but that shift would take time, and it's hard to see who could match China's scale.
Ultimately, the US consumer will end up paying more for these products.
China backlash
US firms operating in China could also face a "China backlash".
Elon Musk's electric car firm Tesla, for instance, has already highlighted just how important the Chinese market is to it.
But it imports all of its products to China and so would see a 25% tariff placed on its cars sold in China - on top of the 15% tax imported vehicles already face there.
This would inevitably push up prices for Tesla in China, making its vehicles less competitive than they already are, relative to others.
Sino-US tensions could also end up "delaying or preventing" Tesla's ability to release its full potential in China, according to Silk Road Research.
How bad can it get?
It's the question I ask every business person I meet, and the answer is typically always the same: nobody knows.
If history is any guide, then past trade wars have led to deep economic malaise. In particular the US Smoot-Hawley tariffs enacted in 1930 are thought to have inspired a trade war, and led to a massive decline in global trade.
As one study points out, world trade fell by 66% from 1929 to 1934, while US exports and imports to and from Europe each also fell by about two-thirds.
While no one is saying we're there yet, businesses are getting more concerned than they have been in the past, especially because of all the uncertainty.
The tit-for-tat mentality between Beijing and Washington could just end up antagonising both sides to a point where they cannot climb down from their hostile positions for fear of losing face.
"You start with protectionism and isolationism," says Victor Mills, chief executive of Singapore's International Chamber of Commerce. "And then you don't just beggar your neighbour, you beggar yourself."
What many business people are hoping of course, is that this sound and fury is just the start of another series of negotiations.
But the worry is that if it's not - it will escalate, and everybody will be the poorer. And that includes you and me.
Tuesday, August 28, 2018
G7: Fact checking Trump's tweets about trade - BBC News
G7: Fact checking Trump's tweets about trade
By Andrew Walker
BBC World Service economics correspondent
11 June 2018
Trump constantly worries about the trade deficit - should we?
President Donald Trump has lashed out at his partners in the G7 group of leading rich economies following a summit in Canada.
He wrote some highly critical tweets which appear to be a response to comments from the host, the Canadian Prime Minister Justin Trudeau, who said that Canada would respond to new tariffs - taxes on imports - imposed by the US on steel and aluminium.
President Trump's tweets complained about the defence spending of US allies (too low in his view) and the trade barriers they impose (too high).
He also reminded the world that he is considering extra tariffs on imports of cars.
So does he have a point?
Donald J. Trump
✔
@realDonaldTrump
Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!
9:03 AM - Jun 10, 2018
On trade he mentioned the possibility of further tariffs on "automobiles flooding the US market ".
It is certainly true that the US imports more cars than it exports. Last year, the US exported 52 billion dollars' worth of passenger cars but imported more than three times that amount.
It's also true that the US tariff on imported cars is relatively low - 2.5% compared to the EU's 10%, although Japan's are zero.
But it's often possible to pick particular products to make a point about how unfair a particular country is.
In the case of the US, you could take its tariffs of 25% on light vans.
To get a better indication of how much a country protects its own industry it makes more sense to look at average tariffs. There are several ways of calculating an average but the general picture that emerges is that the US has tariffs that are among the lowest. Other rich countries do tend to have slightly higher averages, though not by very much.
Donald J. Trump
✔
@realDonaldTrump
Why should I, as President of the United States, allow countries to continue to make Massive Trade Surpluses, as they have for decades, while our Farmers, Workers & Taxpayers have such a big and unfair price to pay? Not fair to the PEOPLE of America! $800 Billion Trade Deficit...
11:17 AM - Jun 11, 2018
If we pick out agriculture, then the developed countries, including the US, do generally have higher tariffs than for industrial goods.
For farm trade the US averages are lower than other rich countries by a more significant margin.
President Trump in one of his latest tweets complained about Canada's 270% tariff on dairy imports. Canada does indeed have a highly regulated and protected dairy sector and one of the tariffs (on a specific type of dairy product) listed in the World Trade Organization database is indeed precisely that. There are others that are in the same very high range.
Dairy wars: Why is Trump threatening Canada over milk?
But the levels of tariffs that countries impose are to a large extent the outcome of negotiated agreements - globally within the World Trade Organisation (WTO) or between smaller groups of countries with trade deals such as the US, Canada and Mexico in the North American Trade Agreement (Nafta).
That is why President Trump often criticises previous administrations over the trade deals they have done.
He also often uses trade imbalances as evidence to demonstrate his view that the US is treated unfairly.
It is indeed true that the US has a deficit with the rest of the world - it imports more than it exports, to the tune of about half a trillion dollars. President Trump gave a larger figure of $800 billion, which is the deficit for goods only. It's partly offset by a surplus in services.
In any event most economists take the view that the trade balance is driven by savings and investment rather than trade policies. If a country saves less than it invests, it will have a trade deficit.
Donald J. Trump
✔
@realDonaldTrump
Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!
12:15 PM - Jun 8, 2018
In another tweet, President Trump complained about the EU and Canada imposing what he called "non-monetary trade barriers against the US".
All countries have them, usually known as non-tariff barriers, or NTBs. There is a wide range. They include regulatory restrictions for safety or environmental reasons, labelling rules and restrictions on who can provide certain services.
Compared with tariffs, NTBs are much harder to quantify and compare.
There is often a perfectly good reason for the rules, but they can also make it more difficult for suppliers in other countries and it is possible that in some cases that is the aim.
To take some examples of NTBs in agriculture and food - and there are examples in many other areas too - US farm groups often complain that their products are excluded from the EU market by rules limiting the use of genetically modified crops, hormones in cattle and the now famous issue of chicken washed with chlorine.
The US also has its own regulatory barriers, including for example restrictions on some offal and on cheese made from unpasteurized milk. Haggis and many European cheeses are excluded by these rules.
Donald J. Trump
✔
@realDonaldTrump
....And add to that the fact that the U.S. pays close to the entire cost of NATO-protecting many of these same countries that rip us off on Trade (they pay only a fraction of the cost-and laugh!). The European Union had a $151 Billion Surplus-should pay much more for Military!
11:29 AM - Jun 11, 2018
On defence, President Trump wrote "....the U.S. pays close to the entire cost of NATO".
The US accounts for more than two thirds of all defence spending by Nato members. In terms of total defence spending, Nato has a guideline for its members - 2% of national income or GDP. The US is one of only six countries that meet the target (the UK is another).
Calling that "close to the entire cost" is perhaps a bit of an exaggeration, but there is no question that the US does carry far more than its share of the financial burden.
He gave specific figures for the US (4% of GDP) and Germany (1%). The figures are correct but rounded to the nearest whole number. According to Nato the figures for 2017 are 3.58% for the US and 1.22% for Germany. That's a large gap, although rounding the numbers makes it look even bigger.
These figures refer to all defence spending. Spending on Nato's own costs is allocated in line with national GDP. The US pays 22.1% and Germany 14.8%.
But this is a very small share of defence spending. It makes more sense to focus on total budgets in this area. A Nato official put it like this:
"These national figures can be considered indirect contributions to NATO, because Allied armed forces contribute to our collective security."
By Andrew Walker
BBC World Service economics correspondent
11 June 2018
Trump constantly worries about the trade deficit - should we?
President Donald Trump has lashed out at his partners in the G7 group of leading rich economies following a summit in Canada.
He wrote some highly critical tweets which appear to be a response to comments from the host, the Canadian Prime Minister Justin Trudeau, who said that Canada would respond to new tariffs - taxes on imports - imposed by the US on steel and aluminium.
President Trump's tweets complained about the defence spending of US allies (too low in his view) and the trade barriers they impose (too high).
He also reminded the world that he is considering extra tariffs on imports of cars.
So does he have a point?
Donald J. Trump
✔
@realDonaldTrump
Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!
9:03 AM - Jun 10, 2018
On trade he mentioned the possibility of further tariffs on "automobiles flooding the US market ".
It is certainly true that the US imports more cars than it exports. Last year, the US exported 52 billion dollars' worth of passenger cars but imported more than three times that amount.
It's also true that the US tariff on imported cars is relatively low - 2.5% compared to the EU's 10%, although Japan's are zero.
But it's often possible to pick particular products to make a point about how unfair a particular country is.
In the case of the US, you could take its tariffs of 25% on light vans.
To get a better indication of how much a country protects its own industry it makes more sense to look at average tariffs. There are several ways of calculating an average but the general picture that emerges is that the US has tariffs that are among the lowest. Other rich countries do tend to have slightly higher averages, though not by very much.
Donald J. Trump
✔
@realDonaldTrump
Why should I, as President of the United States, allow countries to continue to make Massive Trade Surpluses, as they have for decades, while our Farmers, Workers & Taxpayers have such a big and unfair price to pay? Not fair to the PEOPLE of America! $800 Billion Trade Deficit...
11:17 AM - Jun 11, 2018
If we pick out agriculture, then the developed countries, including the US, do generally have higher tariffs than for industrial goods.
For farm trade the US averages are lower than other rich countries by a more significant margin.
President Trump in one of his latest tweets complained about Canada's 270% tariff on dairy imports. Canada does indeed have a highly regulated and protected dairy sector and one of the tariffs (on a specific type of dairy product) listed in the World Trade Organization database is indeed precisely that. There are others that are in the same very high range.
Dairy wars: Why is Trump threatening Canada over milk?
But the levels of tariffs that countries impose are to a large extent the outcome of negotiated agreements - globally within the World Trade Organisation (WTO) or between smaller groups of countries with trade deals such as the US, Canada and Mexico in the North American Trade Agreement (Nafta).
That is why President Trump often criticises previous administrations over the trade deals they have done.
He also often uses trade imbalances as evidence to demonstrate his view that the US is treated unfairly.
It is indeed true that the US has a deficit with the rest of the world - it imports more than it exports, to the tune of about half a trillion dollars. President Trump gave a larger figure of $800 billion, which is the deficit for goods only. It's partly offset by a surplus in services.
In any event most economists take the view that the trade balance is driven by savings and investment rather than trade policies. If a country saves less than it invests, it will have a trade deficit.
Donald J. Trump
✔
@realDonaldTrump
Why isn’t the European Union and Canada informing the public that for years they have used massive Trade Tariffs and non-monetary Trade Barriers against the U.S. Totally unfair to our farmers, workers & companies. Take down your tariffs & barriers or we will more than match you!
12:15 PM - Jun 8, 2018
In another tweet, President Trump complained about the EU and Canada imposing what he called "non-monetary trade barriers against the US".
All countries have them, usually known as non-tariff barriers, or NTBs. There is a wide range. They include regulatory restrictions for safety or environmental reasons, labelling rules and restrictions on who can provide certain services.
Compared with tariffs, NTBs are much harder to quantify and compare.
There is often a perfectly good reason for the rules, but they can also make it more difficult for suppliers in other countries and it is possible that in some cases that is the aim.
To take some examples of NTBs in agriculture and food - and there are examples in many other areas too - US farm groups often complain that their products are excluded from the EU market by rules limiting the use of genetically modified crops, hormones in cattle and the now famous issue of chicken washed with chlorine.
The US also has its own regulatory barriers, including for example restrictions on some offal and on cheese made from unpasteurized milk. Haggis and many European cheeses are excluded by these rules.
Donald J. Trump
✔
@realDonaldTrump
....And add to that the fact that the U.S. pays close to the entire cost of NATO-protecting many of these same countries that rip us off on Trade (they pay only a fraction of the cost-and laugh!). The European Union had a $151 Billion Surplus-should pay much more for Military!
11:29 AM - Jun 11, 2018
On defence, President Trump wrote "....the U.S. pays close to the entire cost of NATO".
The US accounts for more than two thirds of all defence spending by Nato members. In terms of total defence spending, Nato has a guideline for its members - 2% of national income or GDP. The US is one of only six countries that meet the target (the UK is another).
Calling that "close to the entire cost" is perhaps a bit of an exaggeration, but there is no question that the US does carry far more than its share of the financial burden.
He gave specific figures for the US (4% of GDP) and Germany (1%). The figures are correct but rounded to the nearest whole number. According to Nato the figures for 2017 are 3.58% for the US and 1.22% for Germany. That's a large gap, although rounding the numbers makes it look even bigger.
These figures refer to all defence spending. Spending on Nato's own costs is allocated in line with national GDP. The US pays 22.1% and Germany 14.8%.
But this is a very small share of defence spending. It makes more sense to focus on total budgets in this area. A Nato official put it like this:
"These national figures can be considered indirect contributions to NATO, because Allied armed forces contribute to our collective security."
The US stock market rally is broadening, but danger lurks from overseas - CNBC News
The US stock market rally is broadening, but danger lurks from overseas
Major indexes have hit historic highs, but the combination of optimism on trade talks, earnings for the third and fourth quarter and a strong U.S. economy is now creating a virtuous cycle.
The broadest indicators of the market, equal-weighted indexes like the S&P Equal-Weight Index, hit a historic high Monday.
Several strategists have been pointing to the underperformance of the rest of the world's economies against the United States as a source of worry.
Bob Pisani | @BobPisani
Published on August 28, 2018.
CNBC.com
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Nov. 9, 2016. U.S. stocks fluctuated in volatile trading in the aftermath of Donald Trump's surprise presidential election win, as speculation the Republican will pursue business-friendly policies offset some of the broader uncertainty surrounding his ascent.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Nov. 9, 2016. U.S. stocks fluctuated in volatile trading in the aftermath of Donald Trump's surprise presidential election win, as speculation the Republican will pursue business-friendly policies offset some of the broader uncertainty surrounding his ascent.
The rally is broadening.
Major indexes have hit historic highs, but the combination of optimism on trade talks, earnings for the third and fourth quarter and a strong U.S. economy is creating a virtuous cycle.
The big complaint about the rally was that much of the move up this year has been centered on technology stocks, and, specifically, on semiconductors and FAANG stocks like Apple and Alphabet.
That's no longer the case. The market rally has begun to broaden. It's not just that the major indexes have hit new highs, or that the advance/decline line (the cumulative number of stocks advancing versus those declining on a daily basis) has also hit an historic high. Traders have often spoke in amazement about the "rotation" of the market, how every time one market leader starts to falter, another comes to take its place.
But what happens when the "rotation" just becomes a "rising tide that lifts all boats?" You get the kind of action we are now seeing. Consider two typical ways traders divide the stock market:
1. Cyclicals versus defensive stocks. Economically sensitive stocks, otherwise known as cyclicals (industrials, materials, consumer discretionary, financials and real estate, along with technology, which are still considered cyclicals but are somewhat less sensitive to economic cycles) often move in opposition to stocks that are less economically sensitive, otherwise known as defensive (consumer staples, health care and utilities).
But in the last couple weeks, as optimism on trade has returned and earnings estimates for the third quarter have remained strong, the entire market has lifted. Industrials, consumer discretionary, technology and financials — cyclicals — have led, but health care has been strong as well, and even consumer staples has risen.
2. Value versus growth. Growth stocks (the largest sector is technology) are associated with companies growing earnings at an above-average rate. They typically have higher price/earnings ratios. They mostly provide investors with capital appreciation. Value stocks are considered undervalued. They tend to trade at lower prices compared with their fundamentals and are often bought for their dividends. They are also bought when the economy is still doing well but when growth stocks have become too expensive.
Same story here: While growth stocks (technology) have outperformed for several years and continue to generally outperform this year, value stocks (energy and financials, primarily) have had several periods of outperformance this year. Banks have been especially strong in the most recent rally.
One reason we have not seen a big sell-off in technology this year in favor of value is because they are not overpriced. The forward P/E (earnings estimates for the next year) for the S&P technology sector is only 18.4, according to economist Ed Yardeni, about where it was last year.
Finally, here's the stat that most intrigues me. The average stock has been advancing.
The broadest indicators of the market, equal-weighted indexes like the S&P Equal-Weight Index and, most importantly, the Value Line Geometric Composite index, an equal-weighted index of roughly 1,600 stocks that is widely followed as an indicator of the median stock price change, hit a historic high on Monday.
That means it's not just FAANG stocks driving the market higher. When a widely watched index that specifically is designed to track changes in the median stock price hits a historic high, it tells you the rally is broadening.
What could derail this happy scenario? The concerns of earlier in the year, including the Fed tightening too aggressively, higher commodity costs and trade tensions, have failed to derail the rally.
Several strategists have been pointing to the underperformance of the rest of the world's economies against the United States as a source of worry. Their concern is shared by investors. Global markets have notably underperformed the U.S. this year because our economy and our earnings picture have been so much stronger:
Global markets this year
S&P 500 up 8.3 percent
Germany down 2.9 percent
Japan down 3.3 percent
China (Shanghai) down 15.9 percent
Source: CNBC
Still, it's one thing to underperform, and it's another to fall apart. Is there any chance the global economy could slip into recession? Oppenheimer's technical analysis team is one of many that has flagged this as a primary risk not just for global stocks, but also for U.S. investors: "One risk to our outlook is if world equities shift from an underperforming range (rotations continue) to a cycle-ending downtrend (rotations stop)."
How likely is a global recession? Given how accommodative central banks have become, the odds seem against it. But Oppenheimer reflects the current prevailing opinion: "At the least, it confirms our ongoing preference for US over World."
Major indexes have hit historic highs, but the combination of optimism on trade talks, earnings for the third and fourth quarter and a strong U.S. economy is now creating a virtuous cycle.
The broadest indicators of the market, equal-weighted indexes like the S&P Equal-Weight Index, hit a historic high Monday.
Several strategists have been pointing to the underperformance of the rest of the world's economies against the United States as a source of worry.
Bob Pisani | @BobPisani
Published on August 28, 2018.
CNBC.com
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Nov. 9, 2016. U.S. stocks fluctuated in volatile trading in the aftermath of Donald Trump's surprise presidential election win, as speculation the Republican will pursue business-friendly policies offset some of the broader uncertainty surrounding his ascent.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Wednesday, Nov. 9, 2016. U.S. stocks fluctuated in volatile trading in the aftermath of Donald Trump's surprise presidential election win, as speculation the Republican will pursue business-friendly policies offset some of the broader uncertainty surrounding his ascent.
The rally is broadening.
Major indexes have hit historic highs, but the combination of optimism on trade talks, earnings for the third and fourth quarter and a strong U.S. economy is creating a virtuous cycle.
The big complaint about the rally was that much of the move up this year has been centered on technology stocks, and, specifically, on semiconductors and FAANG stocks like Apple and Alphabet.
That's no longer the case. The market rally has begun to broaden. It's not just that the major indexes have hit new highs, or that the advance/decline line (the cumulative number of stocks advancing versus those declining on a daily basis) has also hit an historic high. Traders have often spoke in amazement about the "rotation" of the market, how every time one market leader starts to falter, another comes to take its place.
But what happens when the "rotation" just becomes a "rising tide that lifts all boats?" You get the kind of action we are now seeing. Consider two typical ways traders divide the stock market:
1. Cyclicals versus defensive stocks. Economically sensitive stocks, otherwise known as cyclicals (industrials, materials, consumer discretionary, financials and real estate, along with technology, which are still considered cyclicals but are somewhat less sensitive to economic cycles) often move in opposition to stocks that are less economically sensitive, otherwise known as defensive (consumer staples, health care and utilities).
But in the last couple weeks, as optimism on trade has returned and earnings estimates for the third quarter have remained strong, the entire market has lifted. Industrials, consumer discretionary, technology and financials — cyclicals — have led, but health care has been strong as well, and even consumer staples has risen.
2. Value versus growth. Growth stocks (the largest sector is technology) are associated with companies growing earnings at an above-average rate. They typically have higher price/earnings ratios. They mostly provide investors with capital appreciation. Value stocks are considered undervalued. They tend to trade at lower prices compared with their fundamentals and are often bought for their dividends. They are also bought when the economy is still doing well but when growth stocks have become too expensive.
Same story here: While growth stocks (technology) have outperformed for several years and continue to generally outperform this year, value stocks (energy and financials, primarily) have had several periods of outperformance this year. Banks have been especially strong in the most recent rally.
One reason we have not seen a big sell-off in technology this year in favor of value is because they are not overpriced. The forward P/E (earnings estimates for the next year) for the S&P technology sector is only 18.4, according to economist Ed Yardeni, about where it was last year.
Finally, here's the stat that most intrigues me. The average stock has been advancing.
The broadest indicators of the market, equal-weighted indexes like the S&P Equal-Weight Index and, most importantly, the Value Line Geometric Composite index, an equal-weighted index of roughly 1,600 stocks that is widely followed as an indicator of the median stock price change, hit a historic high on Monday.
That means it's not just FAANG stocks driving the market higher. When a widely watched index that specifically is designed to track changes in the median stock price hits a historic high, it tells you the rally is broadening.
What could derail this happy scenario? The concerns of earlier in the year, including the Fed tightening too aggressively, higher commodity costs and trade tensions, have failed to derail the rally.
Several strategists have been pointing to the underperformance of the rest of the world's economies against the United States as a source of worry. Their concern is shared by investors. Global markets have notably underperformed the U.S. this year because our economy and our earnings picture have been so much stronger:
Global markets this year
S&P 500 up 8.3 percent
Germany down 2.9 percent
Japan down 3.3 percent
China (Shanghai) down 15.9 percent
Source: CNBC
Still, it's one thing to underperform, and it's another to fall apart. Is there any chance the global economy could slip into recession? Oppenheimer's technical analysis team is one of many that has flagged this as a primary risk not just for global stocks, but also for U.S. investors: "One risk to our outlook is if world equities shift from an underperforming range (rotations continue) to a cycle-ending downtrend (rotations stop)."
How likely is a global recession? Given how accommodative central banks have become, the odds seem against it. But Oppenheimer reflects the current prevailing opinion: "At the least, it confirms our ongoing preference for US over World."
Wall Street is wrong — US stock prices 'can't get better than this,' investment manager warns - CNBC News
Wall Street is wrong — US stock prices 'can't get better than this,' investment manager warns
"It can't get better than this, absolutely can't get better than this, but don't worry it will carry on because Wall Street says so … It is nonsense, utter nonsense," Peter Toogood, chief investment officer at financial advisory firm Embark Group, told CNBC's "Squawk Box Europe."
U.S. stocks jumped on Monday, with risk appetite sharpened by news that the U.S. and Mexico had found common ground on key trade terms.
Market sentiment was also buoyed by comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium in Wyoming last week.
Sam Meredith | @smeredith19
Published on August 28, 2018.
CNBC.com
A look at the future of US markets Wall Street is wrong — US stock valuations can’t get any better than this: Expert
It is simply not possible for market participants to make long-term gains from current U.S. stock prices, an investment manager told CNBC on Tuesday.
Wall Street is widely considered to be in a bull market, with the S&P 500 having quadrupled in value since March 2009. Last week, the index's current run-up in stock valuations turned 3,453 days old — making it the longest streak in history, according to some investors' definition.
But, after nine years and five months, a number of investors feel it is now just a matter of time before such a run comes to an end.
"It can't get better than this, absolutely can't get better than this, but don't worry it will carry on because Wall Street says so … It is nonsense, utter nonsense," Peter Toogood, chief investment officer at financial advisory firm Embark Group, told CNBC's "Squawk Box Europe."
"The valuation metric is a matter of fact, not opinion, OK? You don't buy here, you will not make long-term money out of investing today from these levels. Period."
'Recessions can rain from clear blue skies'
U.S. stocks jumped on Monday, with risk appetite sharpened by news that the U.S. and Mexico had found common ground on key trade terms. The agreement could potentially remove a source of economic uncertainty from financial markets, which had been prompted by President Donald Trump's repeated threatens to scrap the 1994 North American Free Trade Agreement (NAFTA).
Market sentiment was also buoyed by comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium in Wyoming last week. Powell said that the U.S. central bank was likely to maintain its policy-tightening program if the economy continues to strengthen.
Global economic risk indicators ‘not yet flashing amber': Strategist Global economic risk indicators ‘not yet flashing amber': Strategist
2 Hours Ago | 03:09
"I think, generally, if you look at global stocks, valuations are not that demanding in spite of some of the narrative out there," William Hobbs, head of investment strategy at Barclays, told CNBC on Tuesday.
"Is the global economy about to come to a juddering halt? Now, obviously humility is always appropriate here, recessions can rain from clear blue skies as they always say but… you have got to continue invest accordingly," he added.
Technology stocks
U.S. tech giant Apple is responsible for around 4 percent of the S&P 500's return since March 2009, Reuters reported, with Microsoft ranking second — contributing 2.4 percent to the current bull run.
"If you are a momentum trader then just stay involved and mostly focus on tech stocks, I suspect, because why go anywhere else?" Embark Group's Toogood said.
In recent months, investors have been grappling with heightened trade concerns as Washington takes a more protectionist stance towards its economy and other trade deals under the Trump administration.
The U.S. has slapped tariffs on billions of dollars worth of Mexican and Chinese imports, to which Mexico and China have retaliated.
"It can't get better than this, absolutely can't get better than this, but don't worry it will carry on because Wall Street says so … It is nonsense, utter nonsense," Peter Toogood, chief investment officer at financial advisory firm Embark Group, told CNBC's "Squawk Box Europe."
U.S. stocks jumped on Monday, with risk appetite sharpened by news that the U.S. and Mexico had found common ground on key trade terms.
Market sentiment was also buoyed by comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium in Wyoming last week.
Sam Meredith | @smeredith19
Published on August 28, 2018.
CNBC.com
A look at the future of US markets Wall Street is wrong — US stock valuations can’t get any better than this: Expert
It is simply not possible for market participants to make long-term gains from current U.S. stock prices, an investment manager told CNBC on Tuesday.
Wall Street is widely considered to be in a bull market, with the S&P 500 having quadrupled in value since March 2009. Last week, the index's current run-up in stock valuations turned 3,453 days old — making it the longest streak in history, according to some investors' definition.
But, after nine years and five months, a number of investors feel it is now just a matter of time before such a run comes to an end.
"It can't get better than this, absolutely can't get better than this, but don't worry it will carry on because Wall Street says so … It is nonsense, utter nonsense," Peter Toogood, chief investment officer at financial advisory firm Embark Group, told CNBC's "Squawk Box Europe."
"The valuation metric is a matter of fact, not opinion, OK? You don't buy here, you will not make long-term money out of investing today from these levels. Period."
'Recessions can rain from clear blue skies'
U.S. stocks jumped on Monday, with risk appetite sharpened by news that the U.S. and Mexico had found common ground on key trade terms. The agreement could potentially remove a source of economic uncertainty from financial markets, which had been prompted by President Donald Trump's repeated threatens to scrap the 1994 North American Free Trade Agreement (NAFTA).
Market sentiment was also buoyed by comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium in Wyoming last week. Powell said that the U.S. central bank was likely to maintain its policy-tightening program if the economy continues to strengthen.
Global economic risk indicators ‘not yet flashing amber': Strategist Global economic risk indicators ‘not yet flashing amber': Strategist
2 Hours Ago | 03:09
"I think, generally, if you look at global stocks, valuations are not that demanding in spite of some of the narrative out there," William Hobbs, head of investment strategy at Barclays, told CNBC on Tuesday.
"Is the global economy about to come to a juddering halt? Now, obviously humility is always appropriate here, recessions can rain from clear blue skies as they always say but… you have got to continue invest accordingly," he added.
Technology stocks
U.S. tech giant Apple is responsible for around 4 percent of the S&P 500's return since March 2009, Reuters reported, with Microsoft ranking second — contributing 2.4 percent to the current bull run.
"If you are a momentum trader then just stay involved and mostly focus on tech stocks, I suspect, because why go anywhere else?" Embark Group's Toogood said.
In recent months, investors have been grappling with heightened trade concerns as Washington takes a more protectionist stance towards its economy and other trade deals under the Trump administration.
The U.S. has slapped tariffs on billions of dollars worth of Mexican and Chinese imports, to which Mexico and China have retaliated.
President Trump Said He's Replacing NAFTA With His Own Deal. That's Not Exactly Right - TIME
President Trump Said He's Replacing NAFTA With His Own Deal. That's Not Exactly Right
By JUSTIN WORLAND August 27, 2018
President Donald Trump gathered reporters in the Oval Office Monday to make a dramatic-sounding announcement: He was going to end the North American Free Trade Agreement and replace it with a bilateral deal his Administration had negotiated with Mexico.
“It’s a big day for trade,” said Trump. “They used to call it NAFTA. We’re going to call it the United States-Mexico trade agreement.”
But Trump’s claim was met with immediate pushback from the president of Mexico, who had been patched into the makeshift press conference by speakerphone. Speaking through a translator, President Enrique Peña Nieto continued to refer to the landmark agreement using the Spanish abbreviation for NAFTA and undercut the claim of a bilateral agreement.
“It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this,” he said on the phone.
The president’s own staff then also undercut the message. Sitting in the Oval Office, U.S. Trade Representative Robert Lighthizer to ask when the deal would be signed. Lighthizer noted that any signing would be delayed until Congress was informed and a 90-day waiting period passed. “I will terminate the existing deal,” Trump replied. “When that happens I can’t quite tell you. It depends on what the timetable is with Congress.”
Trump has long had a reputation for overpromising on his business deals, and his record as president includes similarly dramatic claims on things like denuclearizing the Korean peninsula which remain to be completed. But as the Oval Office pushback showed, there are more reasons than usual to be skeptical of Trump’s sales pitch on the new free trade agreement.
The first tipoff was the theatrics, which were rushed even by Trump’s looser standards. Trump and his Mexican counterpart were not talking face-to-face as might be expected for a momentous trade announcement, but rather by speakerphone, which led to a briefly comical moment when Trump couldn’t get him on the line at first.
The second is the timing. The announcement came after more than a year of NAFTA negotiations between the U.S., Canada and Mexico, as Trump faces looming midterm elections in which he is aiming to reassure farmers and others in his base that his aggressive trade policy is getting results. Canada and Mexico are the U.S.’s second- and third-biggest trading partners, respectively, and an important destination for U.S. exports.
Trump said Monday that he hopes Canada will join the deal by Friday, a move which seemed intended to bring Canada, to the table quickly and limit the country’s ability to press its own concerns. But a senior Administration official insisted that wasn’t the case on a conference call with journalists.
“This wasn’t designed to put pressure on anyone or anything like that,” he said. “This is a normal, orderly way to arrive at an agreement with three people.”
Canadian Foreign Affairs Minister Chrystia Freeland is due to arrive in Washington D.C. Tuesday, and described the news as “encouraging” in a statement. But the country has in the past insisted that it would not be bullied into accepting a deal without working through its areas of concern and it seems likely the Friday deadline will pass without a new agreement in place.
The Administration says it will proceed with the new deal regardless of what happens with Canada, but that promise could run up against several roadblocks. In the past, Mexico has insisted that any NAFTA deal be trilateral, and Peña Nieto seemed to suggest a similar vein of thinking Monday, repeatedly telling Trump that he wanted Canada to be a part of the new deal. Asked about whether Mexico would be willing to sign a deal without Canada, a senior Administration official demurred, offering arguments for why the country might want to without saying that it would.
“For more clarity, maybe ask the Mexicans,” the official said.
Moreover, revising NAFTA would require Congressional approval and Congress might reject a deal that doesn’t include all three countries. Earlier this year, 36 Republican senators including Senate Majority Leader Mitch McConnell calling on Trump to keep the deal intact while modernizing it. Trump could try to abandon the deal without Congressional approval, but the move would likely draw legal challenges.
Perhaps more significantly, skeptics of the new deal have grounds to question whether the White House was entitled to negotiate a new trade deal in the first place. A 2015 law requires the Administration to inform Congress 90 days before beginning trade negotiations. The White House told Congress last year that it would renegotiate NAFTA, but never said it would start talks on an entirely new deal. (The Administration said Monday that it believes that it has met its legal requirement).
Regardless of Trump’s claims of reaching an entirely new trade deal, the new agreement does seem to bring the three countries much closer to a potential NAFTA rewrite more than 25 years after it took effect. The deal resolves several thorny debates between the U.S. and Mexico including how much of a car’s content needs to be made in the region to qualify for tariff exemption, the minimum wage for some autoworkers and how to treat Mexico’s energy sector, which was closed to U.S. investment when NAFTA was first drafted.
Trump may yet get Canada and Mexico to agree to a new deal, but the announcement Monday was part of the process, not, as Trump seemed to suggest, the end result.
By JUSTIN WORLAND August 27, 2018
President Donald Trump gathered reporters in the Oval Office Monday to make a dramatic-sounding announcement: He was going to end the North American Free Trade Agreement and replace it with a bilateral deal his Administration had negotiated with Mexico.
“It’s a big day for trade,” said Trump. “They used to call it NAFTA. We’re going to call it the United States-Mexico trade agreement.”
But Trump’s claim was met with immediate pushback from the president of Mexico, who had been patched into the makeshift press conference by speakerphone. Speaking through a translator, President Enrique Peña Nieto continued to refer to the landmark agreement using the Spanish abbreviation for NAFTA and undercut the claim of a bilateral agreement.
“It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this,” he said on the phone.
The president’s own staff then also undercut the message. Sitting in the Oval Office, U.S. Trade Representative Robert Lighthizer to ask when the deal would be signed. Lighthizer noted that any signing would be delayed until Congress was informed and a 90-day waiting period passed. “I will terminate the existing deal,” Trump replied. “When that happens I can’t quite tell you. It depends on what the timetable is with Congress.”
Trump has long had a reputation for overpromising on his business deals, and his record as president includes similarly dramatic claims on things like denuclearizing the Korean peninsula which remain to be completed. But as the Oval Office pushback showed, there are more reasons than usual to be skeptical of Trump’s sales pitch on the new free trade agreement.
The first tipoff was the theatrics, which were rushed even by Trump’s looser standards. Trump and his Mexican counterpart were not talking face-to-face as might be expected for a momentous trade announcement, but rather by speakerphone, which led to a briefly comical moment when Trump couldn’t get him on the line at first.
The second is the timing. The announcement came after more than a year of NAFTA negotiations between the U.S., Canada and Mexico, as Trump faces looming midterm elections in which he is aiming to reassure farmers and others in his base that his aggressive trade policy is getting results. Canada and Mexico are the U.S.’s second- and third-biggest trading partners, respectively, and an important destination for U.S. exports.
Trump said Monday that he hopes Canada will join the deal by Friday, a move which seemed intended to bring Canada, to the table quickly and limit the country’s ability to press its own concerns. But a senior Administration official insisted that wasn’t the case on a conference call with journalists.
“This wasn’t designed to put pressure on anyone or anything like that,” he said. “This is a normal, orderly way to arrive at an agreement with three people.”
Canadian Foreign Affairs Minister Chrystia Freeland is due to arrive in Washington D.C. Tuesday, and described the news as “encouraging” in a statement. But the country has in the past insisted that it would not be bullied into accepting a deal without working through its areas of concern and it seems likely the Friday deadline will pass without a new agreement in place.
The Administration says it will proceed with the new deal regardless of what happens with Canada, but that promise could run up against several roadblocks. In the past, Mexico has insisted that any NAFTA deal be trilateral, and Peña Nieto seemed to suggest a similar vein of thinking Monday, repeatedly telling Trump that he wanted Canada to be a part of the new deal. Asked about whether Mexico would be willing to sign a deal without Canada, a senior Administration official demurred, offering arguments for why the country might want to without saying that it would.
“For more clarity, maybe ask the Mexicans,” the official said.
Moreover, revising NAFTA would require Congressional approval and Congress might reject a deal that doesn’t include all three countries. Earlier this year, 36 Republican senators including Senate Majority Leader Mitch McConnell calling on Trump to keep the deal intact while modernizing it. Trump could try to abandon the deal without Congressional approval, but the move would likely draw legal challenges.
Perhaps more significantly, skeptics of the new deal have grounds to question whether the White House was entitled to negotiate a new trade deal in the first place. A 2015 law requires the Administration to inform Congress 90 days before beginning trade negotiations. The White House told Congress last year that it would renegotiate NAFTA, but never said it would start talks on an entirely new deal. (The Administration said Monday that it believes that it has met its legal requirement).
Regardless of Trump’s claims of reaching an entirely new trade deal, the new agreement does seem to bring the three countries much closer to a potential NAFTA rewrite more than 25 years after it took effect. The deal resolves several thorny debates between the U.S. and Mexico including how much of a car’s content needs to be made in the region to qualify for tariff exemption, the minimum wage for some autoworkers and how to treat Mexico’s energy sector, which was closed to U.S. investment when NAFTA was first drafted.
Trump may yet get Canada and Mexico to agree to a new deal, but the announcement Monday was part of the process, not, as Trump seemed to suggest, the end result.
Steel tariffs - what impact will they really have? - BBC News
Steel tariffs - what impact will they really have?
By Zoe Thomas
BBC Business reporter, New York
2 March 2018
President Trump announced his intention to impose a 25% tariff on all US steel imports at the White House.
President Donald Trump's announcement that the US would impose a 25% tariff on the imports of steel entering the US has shaken the stock market and rattled some of America's closest trading partners.
The President is expected to sign the order to impose the tariffs next week.
But for workers in America's steel industry, the decision was the fulfilment of a promise President Trump made to them during the 2016 election.
"Just like the American steel from Pennsylvania that built the Empire State Building, it will be American steel that will fortify America's crumbling bridges," President Trump said at a campaign rally.
But for some US steelworkers, the decision to act may already be too late.
The ArcelorMittal steel mill in Conshohocken is getting rid of 150 workers
Workers in limbo
Kimberly Allen may be one of them. For the last 23 years, she has worked 12-hour shifts at the Conshohocken steel mill in Pennsylvania.
It's a job that allowed her to provide for her son as a single mother and one that will be hard to replace if she loses it during two rounds of cuts set for April and August.
"I was able to build my house and provided a good lifestyle for my son, but now I'm in jeopardy of having to start all over again," she says.
The 47-year-old followed her father's footsteps when she entered the steel industry and was able to earn up to $75,000 (£54,500) some years.
In September 2017 the plant's owner ArcelorMittal announced it planned to idle the rolling mill and cut at least 150 of the 205 workers.
The mill will not be fully closed and the company could restart production if the prospects for US steel change.
"Right now we are in limbo," Ms Allen says.
Kemeen Thompson, president of the local union, said it was President Trump's promise to protect manufacturing jobs and tackle trade imbalances that convinced many union members to vote for him.
Image caption
Kameen Thompson is the head of the local steel workers union
Pennsylvania is a traditional stronghold for the Democratic Party, but Donald Trump was able to win over many blue-collar workers who were a key to his victory in that state.
Like President Trump, Mr Thompson says his members aren't anti-trade they just want it to be more balanced.
"We're not saying don't trade, but it has to be fair trade," says Mr Thompson.
That's a sentiment often repeated by President Trump.
Many of the members, he says, are unprepared to look for jobs again. Most have worked in the Conshohocken steel mill for over a decade.
Chuck Hauer, a Trump-voter who has worked in the plant for nearly a quarter of a century, says the plant has seen dips and faced job cuts before, but not like this.
President Trump has promised to protect US manufacturing jobs
"This time was different. This time we were given a date and a hard number [for the job cuts]," he says.
The steel industry in the US directly employed just 140,000 people in 2015 according to the American Iron and Steel Institute.
The organisation, which represents US steel companies, was quick to heap praise on the White House's announcement.
Trade retaliation
But while the industry may now be breathing a sigh of relief others fear the tariffs could lead to a hike in the price of cars and construction. It could also lead to retaliation from other trading partners.
Imposing these steel tariffs could "erode the rules-based world trade system," according to Chad Bown, a senior fellow at the Peterson Institute for International Economics.
Countries are likely to challenge the US decision in international court arguing it violates World Trade Organization (WTO) rules, he says.
Most US steel imports come from Canada, Brazil and South Korea. President Trump and the US steel industry though has focused much of their blame on China.
The US is the world's largest importer of steel
Mexico, China and the European Union have all said they would consider punitive tariffs.
Among the EU's discussed targets for retaliation are bourbon from Kentucky and dairy from Wisconsin. Those states are home to the highest ranking members of the US congress.
These tariffs could also derail the renegotiations of the North American Free Trade Agreement (NAFTA) and trade talks with South Korea.
"If you try to use trade restrictions here you won't hurt China you will hurt your friends," says Mr Brown.
Cheap metal
President Trump met with steel industry bosses at the White House to announce the tariffs
In 2005, China produced nearly a third of the world's steel. By 2017, it was nearer to half the global supply.
But as China's economy slowed and the amount of Chinese domestic construction dipped, so did local steel consumption. Prices of the metal have fallen for the past five years as excess supply in China weighted on the international market.
The US tariffs won't cause that oversupply to go away and workers in Conshohocken know that. For now, they are just grateful the US President has finally acted.
Chuck Hauer is doubtful the move will save his role, but he believes it will help the industry which he says is the "cornerstone of America".
For the wider US economy though a potential trade war could put the future of many more industries into limbo.
By Zoe Thomas
BBC Business reporter, New York
2 March 2018
President Trump announced his intention to impose a 25% tariff on all US steel imports at the White House.
President Donald Trump's announcement that the US would impose a 25% tariff on the imports of steel entering the US has shaken the stock market and rattled some of America's closest trading partners.
The President is expected to sign the order to impose the tariffs next week.
But for workers in America's steel industry, the decision was the fulfilment of a promise President Trump made to them during the 2016 election.
"Just like the American steel from Pennsylvania that built the Empire State Building, it will be American steel that will fortify America's crumbling bridges," President Trump said at a campaign rally.
But for some US steelworkers, the decision to act may already be too late.
The ArcelorMittal steel mill in Conshohocken is getting rid of 150 workers
Workers in limbo
Kimberly Allen may be one of them. For the last 23 years, she has worked 12-hour shifts at the Conshohocken steel mill in Pennsylvania.
It's a job that allowed her to provide for her son as a single mother and one that will be hard to replace if she loses it during two rounds of cuts set for April and August.
"I was able to build my house and provided a good lifestyle for my son, but now I'm in jeopardy of having to start all over again," she says.
The 47-year-old followed her father's footsteps when she entered the steel industry and was able to earn up to $75,000 (£54,500) some years.
In September 2017 the plant's owner ArcelorMittal announced it planned to idle the rolling mill and cut at least 150 of the 205 workers.
The mill will not be fully closed and the company could restart production if the prospects for US steel change.
"Right now we are in limbo," Ms Allen says.
Kemeen Thompson, president of the local union, said it was President Trump's promise to protect manufacturing jobs and tackle trade imbalances that convinced many union members to vote for him.
Image caption
Kameen Thompson is the head of the local steel workers union
Pennsylvania is a traditional stronghold for the Democratic Party, but Donald Trump was able to win over many blue-collar workers who were a key to his victory in that state.
Like President Trump, Mr Thompson says his members aren't anti-trade they just want it to be more balanced.
"We're not saying don't trade, but it has to be fair trade," says Mr Thompson.
That's a sentiment often repeated by President Trump.
Many of the members, he says, are unprepared to look for jobs again. Most have worked in the Conshohocken steel mill for over a decade.
Chuck Hauer, a Trump-voter who has worked in the plant for nearly a quarter of a century, says the plant has seen dips and faced job cuts before, but not like this.
President Trump has promised to protect US manufacturing jobs
"This time was different. This time we were given a date and a hard number [for the job cuts]," he says.
The steel industry in the US directly employed just 140,000 people in 2015 according to the American Iron and Steel Institute.
The organisation, which represents US steel companies, was quick to heap praise on the White House's announcement.
Trade retaliation
But while the industry may now be breathing a sigh of relief others fear the tariffs could lead to a hike in the price of cars and construction. It could also lead to retaliation from other trading partners.
Imposing these steel tariffs could "erode the rules-based world trade system," according to Chad Bown, a senior fellow at the Peterson Institute for International Economics.
Countries are likely to challenge the US decision in international court arguing it violates World Trade Organization (WTO) rules, he says.
Most US steel imports come from Canada, Brazil and South Korea. President Trump and the US steel industry though has focused much of their blame on China.
The US is the world's largest importer of steel
Mexico, China and the European Union have all said they would consider punitive tariffs.
Among the EU's discussed targets for retaliation are bourbon from Kentucky and dairy from Wisconsin. Those states are home to the highest ranking members of the US congress.
These tariffs could also derail the renegotiations of the North American Free Trade Agreement (NAFTA) and trade talks with South Korea.
"If you try to use trade restrictions here you won't hurt China you will hurt your friends," says Mr Brown.
Cheap metal
President Trump met with steel industry bosses at the White House to announce the tariffs
In 2005, China produced nearly a third of the world's steel. By 2017, it was nearer to half the global supply.
But as China's economy slowed and the amount of Chinese domestic construction dipped, so did local steel consumption. Prices of the metal have fallen for the past five years as excess supply in China weighted on the international market.
The US tariffs won't cause that oversupply to go away and workers in Conshohocken know that. For now, they are just grateful the US President has finally acted.
Chuck Hauer is doubtful the move will save his role, but he believes it will help the industry which he says is the "cornerstone of America".
For the wider US economy though a potential trade war could put the future of many more industries into limbo.
What could China do in a US trade war? - BBC News
What could China do in a US trade war?
Karishma Vaswani
Asia business correspondent
@BBCKarishma on Twitter
24 January 2018
President Trump's backing for slapping tariffs on imports of washing machines and solar panels will hit China and South Korea hardest.
And it has opened up the prospect of some retaliation - especially from Beijing.
The hardline Chinese publication Global Times says "nothing good" would come out of a trade war with President Trump, and has warned that China could fight back.
There's lots at stake. The two countries did $578.6bn worth of trade in 2016.
And by the US government's own estimates that trade supports just under a million American jobs.
So what could China do? Well here are a few options:
1) File complaints to the World Trade Organisation
China says the US tariffs are bad for global trade and has already said that it will work with other WTO members to defend itself.
Of course there will be plenty in Washington who won't miss the irony of China - much-maligned for its own trade practices - complaining that it is being hard done to.
2) Limit US beef imports
Last May, the US and China signed a deal to allow, amongst other things, the resumption of US beef exports to China after 14 years.
But there are specific requirements from the Chinese that US beef companies need to adhere to.
Although trade has barely just begun, China could raise these health and safety standards and make life far more difficult for the US beef exporting businesses that are looking to capitalise on middle class Chinese consumers.
3) Tell Chinese customers not to buy American cars
China is the world's biggest passenger car market. By 2022 it will contribute to over half of the world's car growth.
China is also consistently among the top five export markets for US cars and car parts, so a directive from the government to stop buying American cars out of loyalty to the Chinese state would hurt US manufacturers.
It's not unheard of for Beijing to dictate how Chinese consumers spend their money.
Korean retailer Lotte Mart for example, suffered massive losses in China because of the Beijing-Seoul spat over a US anti-missile system.
4) Tell tourists to stop visiting the US
China is the world's leading outbound tourist market, with more than 130 million Chinese people travelling around the world each year - a number that just keeps rising.
They spend something like $260bn (£185.2bn) a year when they travel, and while the most popular Chinese tourist spots tend to be in Asia, the US has also benefited.
Chinese tourists are projected to spend $450bn on holidays and shopping overseas by 2025, so the US could lose out if Beijing says America is an unsavoury place to travel to.
5) Sell some US bonds
China owns more than a $1tn of US debt.
It has threatened to sell US Treasuries before, and many have worried that this level of debt could mean that Beijing has leverage over the US economy.
But the truth is even if China did sell US debt, it would most likely be picked up by other countries.
General Motors sells about 70% more cars in China than it does in the US
But will anything happen?
The reality is China doesn't want a trade spat to from escalate into a more damaging confrontation.
If a trade war between the two countries does escalate, it won't just be Beijing and the US losing out.
The wider Asian region could suffer too, simply because of how integrated global supply chains are.
But we might well be just days away from more tariffs - with President Trump to soon decide whether to slap extra duties on steel and aluminium imports. China is the world's largest producer of both.
Then there's the intellectual property theft investigation against China, or Section 301, the findings of which should be released soon.
Now, as I've said before, President Trump hasn't really been as hard on China as he said he would during his election campaign - partly because he needs Beijing onside to help push North Korea into giving up its aggressive nuclear strategy.
But with more pressure coming from the voters who elected him, the Republican base, and mid-terms this year - President Trump could decide that now's the time to finally push his 'America first' policy through.
Karishma Vaswani
Asia business correspondent
@BBCKarishma on Twitter
24 January 2018
President Trump's backing for slapping tariffs on imports of washing machines and solar panels will hit China and South Korea hardest.
And it has opened up the prospect of some retaliation - especially from Beijing.
The hardline Chinese publication Global Times says "nothing good" would come out of a trade war with President Trump, and has warned that China could fight back.
There's lots at stake. The two countries did $578.6bn worth of trade in 2016.
And by the US government's own estimates that trade supports just under a million American jobs.
So what could China do? Well here are a few options:
1) File complaints to the World Trade Organisation
China says the US tariffs are bad for global trade and has already said that it will work with other WTO members to defend itself.
Of course there will be plenty in Washington who won't miss the irony of China - much-maligned for its own trade practices - complaining that it is being hard done to.
2) Limit US beef imports
Last May, the US and China signed a deal to allow, amongst other things, the resumption of US beef exports to China after 14 years.
But there are specific requirements from the Chinese that US beef companies need to adhere to.
Although trade has barely just begun, China could raise these health and safety standards and make life far more difficult for the US beef exporting businesses that are looking to capitalise on middle class Chinese consumers.
3) Tell Chinese customers not to buy American cars
China is the world's biggest passenger car market. By 2022 it will contribute to over half of the world's car growth.
China is also consistently among the top five export markets for US cars and car parts, so a directive from the government to stop buying American cars out of loyalty to the Chinese state would hurt US manufacturers.
It's not unheard of for Beijing to dictate how Chinese consumers spend their money.
Korean retailer Lotte Mart for example, suffered massive losses in China because of the Beijing-Seoul spat over a US anti-missile system.
4) Tell tourists to stop visiting the US
China is the world's leading outbound tourist market, with more than 130 million Chinese people travelling around the world each year - a number that just keeps rising.
They spend something like $260bn (£185.2bn) a year when they travel, and while the most popular Chinese tourist spots tend to be in Asia, the US has also benefited.
Chinese tourists are projected to spend $450bn on holidays and shopping overseas by 2025, so the US could lose out if Beijing says America is an unsavoury place to travel to.
5) Sell some US bonds
China owns more than a $1tn of US debt.
It has threatened to sell US Treasuries before, and many have worried that this level of debt could mean that Beijing has leverage over the US economy.
But the truth is even if China did sell US debt, it would most likely be picked up by other countries.
General Motors sells about 70% more cars in China than it does in the US
But will anything happen?
The reality is China doesn't want a trade spat to from escalate into a more damaging confrontation.
If a trade war between the two countries does escalate, it won't just be Beijing and the US losing out.
The wider Asian region could suffer too, simply because of how integrated global supply chains are.
But we might well be just days away from more tariffs - with President Trump to soon decide whether to slap extra duties on steel and aluminium imports. China is the world's largest producer of both.
Then there's the intellectual property theft investigation against China, or Section 301, the findings of which should be released soon.
Now, as I've said before, President Trump hasn't really been as hard on China as he said he would during his election campaign - partly because he needs Beijing onside to help push North Korea into giving up its aggressive nuclear strategy.
But with more pressure coming from the voters who elected him, the Republican base, and mid-terms this year - President Trump could decide that now's the time to finally push his 'America first' policy through.
Four reasons Trump is hanging tough on trade - BBC News
Four reasons Trump is hanging tough on trade
Kamal Ahmed
Economics editor
@bbckamal on Twitter
5 March 2018
First they came for the washing machines.
Then the solar panels.
And now steel and aluminium.
President Donald Trump has always made it clear he wanted a new approach to trade.
And in the White House's proposals for new tariffs on steel and aluminium - following similar moves on domestic appliances and green infrastructure - he has revealed the latest push to put America First into action.
Given the statistics since the Second World War suggest that global economic growth is linked to higher levels of free trade, this might seem a contrary approach for the largest economy in the world.
There are a myriad of economic studies which argue that protectionism ultimately reduces employment and increases prices for consumers.
Adam Smith, often described as the father of free market economics, said: "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy".
Just as it makes sense for a family to "trade" with others for its own well-being - buying and selling goods - it makes the same sense for countries, Adam Smith argued.
More trade, freer trade, makes economic sense, proponents argue.
What would China do in a US trade war?
Five reasons why trade wars aren't easy to win
Steel tariffs: What impact will they really have?
So, why is President Trump taking a different view?
1. Headline grabber
The general trend of global economics is towards freer trade, whatever the noise around protectionism.
The latest World Trade Organization (WTO) statistical review revealed that trade restrictive measures had fallen to their lowest level since 2008.
So, a threatened increase in tariffs grabs headlines, but its economic effects will be at the margins given the fundamentals underpinning global trade flows.
Cheap imports have been blamed for a downturn in the US steel industry
2. Easy political argument
The gains from free trade - for example, lower consumer prices because of the reduced cost of imported goods and the reduction in poverty in far off countries - are diffuse, distant and difficult to quantify.
Conversely, the "impact" of cheaper imports - for example a closed factory - is concentrated and easy to see.
During the Presidential campaign I visited Monessan, Pennsylvania, the heart of America's rust belt.
It used to be a steel producing town of 40,000 people.
That number has fallen to 7,000 and the town is scarred by the derelict skeletons of once prosperous factories.
Unemployment and poverty rates are crippling high.
You can see a short video of my interview with the town mayor, Lou Mavrakis, from 2016 here.
His anger is palpable.
In such a situation, it is relatively straightforward to focus on cheaper imports as the cause of the problem, despite other factors - such as a change in the type of high-tech steel markets are demanding - being equally significant.
America also lacks the type of unemployment safety net and skills retraining common across Europe - so the effects of factory closures are starker.
With such a toxic mix, President Trump - with the crucial mid-term elections approaching - is making a political argument to the voters of Pennsylvania.
I will block cheaper steel imports and save jobs.
Even if the economics suggest that - in aggregate - the opposite will be the case.
The WTO has admitted that gains from free trade are "often uneven"
3. Short-term reality
President Trump is arguing that global free trade has been nothing of the sort.
It has in fact been asymmetric trade, more helpful to emerging markets than to established ones.
This approach to trade - as a zero-sum gain of "you win, therefore I must lose" - is again disputed by economists.
The WTO says that protectionist measures "ultimately leads to bloated, inefficient producers supplying consumers with outdated, unattractive products, in the end, factories close and jobs are lost despite the protection and subsidies".
"If other governments around the world pursue the same policies, markets contract and world economic activity is reduced."
Which will have a negative impact on America.
But long-term economic risk is of less concern to Present Trump than short-term realities.
The WTO has admitted, belatedly some would argue, that the gains from free trade are "often uneven" and "may have led to rising wage inequality".
Those at the lower end of the income scale are particularly affected.
That downside - smaller than the overall gains of free trade but still significant - is President Trump's focus.
4. The final reason, I believe, is a signal to the world.
President Trump's policy is not just America First, but America Decides.
He is attempting to show that it will be for America to call the tune on trade, whatever the warnings from Theresa May about her "deep concern" about protectionist moves.
Free trade deals with the US - with the UK for example - will be on America's terms.
It was John Wayne who - quoting the words of John Mitchum - said of America that "my pulse runs fast at the might of her domain".
President Trump - I would imagine - feels similar.
Kamal Ahmed
Economics editor
@bbckamal on Twitter
5 March 2018
First they came for the washing machines.
Then the solar panels.
And now steel and aluminium.
President Donald Trump has always made it clear he wanted a new approach to trade.
And in the White House's proposals for new tariffs on steel and aluminium - following similar moves on domestic appliances and green infrastructure - he has revealed the latest push to put America First into action.
Given the statistics since the Second World War suggest that global economic growth is linked to higher levels of free trade, this might seem a contrary approach for the largest economy in the world.
There are a myriad of economic studies which argue that protectionism ultimately reduces employment and increases prices for consumers.
Adam Smith, often described as the father of free market economics, said: "It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy".
Just as it makes sense for a family to "trade" with others for its own well-being - buying and selling goods - it makes the same sense for countries, Adam Smith argued.
More trade, freer trade, makes economic sense, proponents argue.
What would China do in a US trade war?
Five reasons why trade wars aren't easy to win
Steel tariffs: What impact will they really have?
So, why is President Trump taking a different view?
1. Headline grabber
The general trend of global economics is towards freer trade, whatever the noise around protectionism.
The latest World Trade Organization (WTO) statistical review revealed that trade restrictive measures had fallen to their lowest level since 2008.
So, a threatened increase in tariffs grabs headlines, but its economic effects will be at the margins given the fundamentals underpinning global trade flows.
Cheap imports have been blamed for a downturn in the US steel industry
2. Easy political argument
The gains from free trade - for example, lower consumer prices because of the reduced cost of imported goods and the reduction in poverty in far off countries - are diffuse, distant and difficult to quantify.
Conversely, the "impact" of cheaper imports - for example a closed factory - is concentrated and easy to see.
During the Presidential campaign I visited Monessan, Pennsylvania, the heart of America's rust belt.
It used to be a steel producing town of 40,000 people.
That number has fallen to 7,000 and the town is scarred by the derelict skeletons of once prosperous factories.
Unemployment and poverty rates are crippling high.
You can see a short video of my interview with the town mayor, Lou Mavrakis, from 2016 here.
His anger is palpable.
In such a situation, it is relatively straightforward to focus on cheaper imports as the cause of the problem, despite other factors - such as a change in the type of high-tech steel markets are demanding - being equally significant.
America also lacks the type of unemployment safety net and skills retraining common across Europe - so the effects of factory closures are starker.
With such a toxic mix, President Trump - with the crucial mid-term elections approaching - is making a political argument to the voters of Pennsylvania.
I will block cheaper steel imports and save jobs.
Even if the economics suggest that - in aggregate - the opposite will be the case.
The WTO has admitted that gains from free trade are "often uneven"
3. Short-term reality
President Trump is arguing that global free trade has been nothing of the sort.
It has in fact been asymmetric trade, more helpful to emerging markets than to established ones.
This approach to trade - as a zero-sum gain of "you win, therefore I must lose" - is again disputed by economists.
The WTO says that protectionist measures "ultimately leads to bloated, inefficient producers supplying consumers with outdated, unattractive products, in the end, factories close and jobs are lost despite the protection and subsidies".
"If other governments around the world pursue the same policies, markets contract and world economic activity is reduced."
Which will have a negative impact on America.
But long-term economic risk is of less concern to Present Trump than short-term realities.
The WTO has admitted, belatedly some would argue, that the gains from free trade are "often uneven" and "may have led to rising wage inequality".
Those at the lower end of the income scale are particularly affected.
That downside - smaller than the overall gains of free trade but still significant - is President Trump's focus.
4. The final reason, I believe, is a signal to the world.
President Trump's policy is not just America First, but America Decides.
He is attempting to show that it will be for America to call the tune on trade, whatever the warnings from Theresa May about her "deep concern" about protectionist moves.
Free trade deals with the US - with the UK for example - will be on America's terms.
It was John Wayne who - quoting the words of John Mitchum - said of America that "my pulse runs fast at the might of her domain".
President Trump - I would imagine - feels similar.
Five reasons why trade wars aren't easy to win - BBC News
Five reasons why trade wars aren't easy to win
By Natalie Sherman
Business reporter, New York
3 March 2018
What happens now that President Donald Trump has said he will move forward with tariffs on steel and aluminium products?
Analysts are warning of a trade war, as officials from Europe, Asia and Latin America threaten retaliation.
Mr Trump predicted it would be "easy" for the US to win.
But most economists and trade experts reject that view, saying every country, including the US, stands to lose in the event of a serious trade fight.
"If what we're talking about is who gets hurt the least, that would probably be the United States, but all countries get hurt in a trade war," says Edward Alden, senior fellow at the Council on Foreign Relations.
Here's why "winning" might not be so easy for the US.
1. Tariffs may not actually boost steel and aluminium jobs much
The United States Steel Corporation plant in Clairton, Pennsylvania
Mr Trump promoted his decision as a win for the steel and aluminium industries and said he expects investment and hiring to follow.
Trump steel tariffs: European Union gears up for trade war
Steel tariffs - what impact will they really have?
But technological changes have made the industry less labour intensive. Historians say previous efforts to protect steel jobs have been largely ineffective.
The companies present at Mr Trump's announcement did not respond to BBC inquiries about potential expansions.
A 2002 analysis by the Peterson Institute for International Economics of proposed tariffs predicted the measures would "save" just 3,500 jobs.
2. Tariffs are likely to raise costs in the US
Companies that use aluminium and steel, like brewers, are worried about higher costs
Today, the steel industry estimates that it employs about 140,000 people - far fewer than in the sectors that rely on it.
Criticism of the tariffs from those firms was immediate. For example, the National Retail Federation blasted it as a "tax on American families".
US Commerce Secretary Wilbur Ross said companies were over-reacting, but Mr Alden says the economic costs will be serious.
The Charlotte Observer reports that Electrolux, manufacturer of washing machines and cookers, has already put on hold an expansion planned for Tennessee.
3. Tariffs could hurt allies and prompt retaliation
Individual industries and countries - especially places that are already negotiating wider trade deals such as Canada - will be lobbying furiously in the coming days for exemptions from the final tariffs.
Absent that, analysts say they expect retaliation - and a broader weakening of the global free trade system.
Countries could complain to the World Trade Organisation, but such cases take years and Mr Trump has been dismissive of that body.
Moreover, WTO judges may be hesitant to second-guess the rarely used "national security" rationale the US has used to justify the tariffs, says Columbia Law professor Petros Mavroidis.
Those factors make unilateral retaliatory tariffs more likely, he says. Such actions, which are expected to target industries in politically sensitive US states, could be in place within a year, he says.
4. China has options
The US blames China for flooding the market with cheap steel and aluminium and has already stepped up protective measures against Chinese steel products.
Mr Trump says wider tariffs are necessary to stop Chinese steel appearing in the US via other countries.
But US businesses, including those in the car, tech and agriculture industries, are eager to get into the Chinese market, giving leaders there some leverage.
5. The domestic political consequences are unclear
Mr Trump isn't unique among US presidents in using trade policy to protect politically strategic industries.
But how beneficial such actions are is difficult to decipher, given the time lag between the decisions and elections, says Kenneth Lowande, a research fellow at Princeton University's Center for the Study of Democratic Politics.
At the moment, Democrats are among the most vocal defenders of the president's trade policy.
Will Donald Trump mean the end of global trade?
Is Trump wise to take on China over trade?
The move reportedly divided White House advisers, while congressional Republicans, who generally support free trade, have been sharply critical.
By Natalie Sherman
Business reporter, New York
3 March 2018
What happens now that President Donald Trump has said he will move forward with tariffs on steel and aluminium products?
Analysts are warning of a trade war, as officials from Europe, Asia and Latin America threaten retaliation.
Mr Trump predicted it would be "easy" for the US to win.
But most economists and trade experts reject that view, saying every country, including the US, stands to lose in the event of a serious trade fight.
"If what we're talking about is who gets hurt the least, that would probably be the United States, but all countries get hurt in a trade war," says Edward Alden, senior fellow at the Council on Foreign Relations.
Here's why "winning" might not be so easy for the US.
1. Tariffs may not actually boost steel and aluminium jobs much
The United States Steel Corporation plant in Clairton, Pennsylvania
Mr Trump promoted his decision as a win for the steel and aluminium industries and said he expects investment and hiring to follow.
Trump steel tariffs: European Union gears up for trade war
Steel tariffs - what impact will they really have?
But technological changes have made the industry less labour intensive. Historians say previous efforts to protect steel jobs have been largely ineffective.
The companies present at Mr Trump's announcement did not respond to BBC inquiries about potential expansions.
A 2002 analysis by the Peterson Institute for International Economics of proposed tariffs predicted the measures would "save" just 3,500 jobs.
2. Tariffs are likely to raise costs in the US
Companies that use aluminium and steel, like brewers, are worried about higher costs
Today, the steel industry estimates that it employs about 140,000 people - far fewer than in the sectors that rely on it.
Criticism of the tariffs from those firms was immediate. For example, the National Retail Federation blasted it as a "tax on American families".
US Commerce Secretary Wilbur Ross said companies were over-reacting, but Mr Alden says the economic costs will be serious.
The Charlotte Observer reports that Electrolux, manufacturer of washing machines and cookers, has already put on hold an expansion planned for Tennessee.
3. Tariffs could hurt allies and prompt retaliation
Individual industries and countries - especially places that are already negotiating wider trade deals such as Canada - will be lobbying furiously in the coming days for exemptions from the final tariffs.
Absent that, analysts say they expect retaliation - and a broader weakening of the global free trade system.
Countries could complain to the World Trade Organisation, but such cases take years and Mr Trump has been dismissive of that body.
Moreover, WTO judges may be hesitant to second-guess the rarely used "national security" rationale the US has used to justify the tariffs, says Columbia Law professor Petros Mavroidis.
Those factors make unilateral retaliatory tariffs more likely, he says. Such actions, which are expected to target industries in politically sensitive US states, could be in place within a year, he says.
4. China has options
The US blames China for flooding the market with cheap steel and aluminium and has already stepped up protective measures against Chinese steel products.
Mr Trump says wider tariffs are necessary to stop Chinese steel appearing in the US via other countries.
But US businesses, including those in the car, tech and agriculture industries, are eager to get into the Chinese market, giving leaders there some leverage.
5. The domestic political consequences are unclear
Mr Trump isn't unique among US presidents in using trade policy to protect politically strategic industries.
But how beneficial such actions are is difficult to decipher, given the time lag between the decisions and elections, says Kenneth Lowande, a research fellow at Princeton University's Center for the Study of Democratic Politics.
At the moment, Democrats are among the most vocal defenders of the president's trade policy.
Will Donald Trump mean the end of global trade?
Is Trump wise to take on China over trade?
The move reportedly divided White House advisers, while congressional Republicans, who generally support free trade, have been sharply critical.
Trade wars, Trump tariffs and protectionism explained - BBC News
Trade wars, Trump tariffs and protectionism explained
26 July 2018
President Trump has imposed tariffs on a range of Chinese goods
US President Donald Trump has shaken the foundations of global trade, slapping steep tariffs on billions of dollars' worth of goods from the EU, Canada, Mexico and China.
All these countries are responding in kind, retaliating with levies on thousands of US products.
This puts the world's largest economies at each other's throats.
But what is a trade war? How does protectionism work? And how will it all affect you?
What is a trade war?
It's what it sounds like - a trade war is when countries try to attack each other's trade with taxes and quotas.
One country will raise tariffs, a type of tax, causing the other to respond, in a tit-for-tat escalation.
This can hurt other nations' economies and lead to rising political tensions between them.
US President Donald Trump reckons trade wars are "good" and easy. He's not afraid to raise tariffs.
Five reasons why trade wars aren't easy to win
Four reasons Trump is hanging tough on trade
But what is a tariff?
It's a tax on a product made abroad.
In theory, taxing items coming into the country means people are less likely to buy them as they become more expensive.
The intention is that they buy cheaper local products instead - boosting your country's economy.
Why is Trump doing this?
The president has placed tariffs on billions of dollars' worth of goods from around the world, in particular China.
He's promised further levies on $200bn (£150bn) worth of Chinese products in September.
Mr Trump also wants to cut the trade deficit with China - a country he has accused of unfair trade practices since before he became president.
Mr Trump made a big point on the campaign trail about cutting the country's trade deficits.
He's convinced it hurts US manufacturing, and has said time and time again on the stump and on Twitter that the US must do more to tackle them.
What's a trade deficit?
It's a term meaning the difference between how much your country buys from another country, compared with how much you sell to that country.
And the US has a massive trade deficit with China.
Last year, it stood at about $375bn. Mr Trump's not happy about that.
He wants to cut back this trade deficit, and he intends to use tariffs to do it.
But while the president hates them, trade deficits are not necessarily a bad thing.
Many wealthier countries have in recent decades shifted from manufacturing economies to service economies.
Reality Check: Is Trump right about US trade deficit?
The US exported $242.7bn worth of services in 2017, in areas like banking, travel and tourism.
Services account for 90% of the US economy. China, in contrast, doesn't export nearly as many services as it does manufactured goods.
So the president's obsession with trade deficits is not always popular, with critics damning the administration's moves as protectionism.
Trump constantly worries about the trade deficit - should we?
What's protectionism?
Protectionism is trying to use restrictions such as tariffs to boost your country's industry, and shield it from foreign competition.
Take Mr Trump's steel and aluminium tariffs.
At the start of March, before his latest moves against China, the president announced a 25% tariff on all steel imports, and 10% on aluminium.
The Trump administration claims the US relies too much on other countries for its metals, and that it couldn't make enough weapons or vehicles using its own industry if a war broke out.
Critics point out the US gets most of its steel from Canada and the EU - staunch US allies.
In theory, taxing foreign steel and aluminium will mean US companies will buy local steel instead.
The thinking is that will boost the US steel and aluminium industries, as more companies will want to buy their goods.
Steel and aluminium prices will go up in the US because there will be less of these goods coming in from abroad - so the greater demand for local steel will push up the price, lifting profits for steel makers.
Protectionism: What Trump has in common with Lincoln and Ferris Bueller
The number of people employed in the US steel industry fell by almost 50,000 between 2000 and 2016
But does it work?
Sort of.
US steel makers could get a boost - demand will drive new hires and bigger profits.
But the US companies that need raw materials, like car and aeroplane makers, will see their costs rise.
Could Trump tariffs damage US steel?
Steel tariffs - what impact will they really have?
That means they might have to put up the prices on their finished products. That would hurt consumers.
So car prices could go up in the US. As could prices for gadgets, plane tickets and even beer - the price of making a can could rise.
Making beer cans could become more pricey - and that cost could be pushed onto consumers
How could tariffs affect me?
They could affect people around the world - especially since China has retaliated.
The world's second-largest economy has taxed US agricultural and industrial products, from soybeans, pork and cotton to aeroplanes, cars and steel pipes.
Charting the US-China trade battle
How a US-China trade war could hurt us all
In theory, China could also tax US tech companies like Apple. That would hit the tech giant, and it could be forced to raise its prices to compensate.
A global trade war could hurt consumers around the world by making it harder for all companies to operate, forcing them to push higher prices onto their customers.
Is free trade better then?
Depends who you ask.
Free trade is the opposite of protectionism - it means as few tariffs as possible, giving people the freedom to buy cheaper or better-made products from anywhere in the world.
This is great for companies trying to cut costs, and that's helped drive prices down and boost the world economy.
Free trade has led to a vast expansion of shipping and transfer of goods around the world
Cars, smart phones, food, flowers - free trade has brought affordable products from around the world to your home.
But at the same time, that means companies are less likely to buy local products. Why buy domestic when you can get more, cheaper, from a different country?
This means the loss of jobs in wealthier countries, and uneven growth - while free trade has made some people richer, it's made others poorer.
How is it all going to end?
No idea.
Historians have pointed out that tariffs often lead to higher costs for the consumer, while economists across the board are against the plans.
The Republican Party is also overwhelmingly against Mr Trump on tariffs - they're big supporters of free trade.
Mr Trump's decision to take on China could lead to adverse effects for consumers in the US and in China, but also worldwide.
An economic showdown between the world's biggest economies doesn't look good for anyone.
26 July 2018
President Trump has imposed tariffs on a range of Chinese goods
US President Donald Trump has shaken the foundations of global trade, slapping steep tariffs on billions of dollars' worth of goods from the EU, Canada, Mexico and China.
All these countries are responding in kind, retaliating with levies on thousands of US products.
This puts the world's largest economies at each other's throats.
But what is a trade war? How does protectionism work? And how will it all affect you?
What is a trade war?
It's what it sounds like - a trade war is when countries try to attack each other's trade with taxes and quotas.
One country will raise tariffs, a type of tax, causing the other to respond, in a tit-for-tat escalation.
This can hurt other nations' economies and lead to rising political tensions between them.
US President Donald Trump reckons trade wars are "good" and easy. He's not afraid to raise tariffs.
Five reasons why trade wars aren't easy to win
Four reasons Trump is hanging tough on trade
But what is a tariff?
It's a tax on a product made abroad.
In theory, taxing items coming into the country means people are less likely to buy them as they become more expensive.
The intention is that they buy cheaper local products instead - boosting your country's economy.
Why is Trump doing this?
The president has placed tariffs on billions of dollars' worth of goods from around the world, in particular China.
He's promised further levies on $200bn (£150bn) worth of Chinese products in September.
Mr Trump also wants to cut the trade deficit with China - a country he has accused of unfair trade practices since before he became president.
Mr Trump made a big point on the campaign trail about cutting the country's trade deficits.
He's convinced it hurts US manufacturing, and has said time and time again on the stump and on Twitter that the US must do more to tackle them.
What's a trade deficit?
It's a term meaning the difference between how much your country buys from another country, compared with how much you sell to that country.
And the US has a massive trade deficit with China.
Last year, it stood at about $375bn. Mr Trump's not happy about that.
He wants to cut back this trade deficit, and he intends to use tariffs to do it.
But while the president hates them, trade deficits are not necessarily a bad thing.
Many wealthier countries have in recent decades shifted from manufacturing economies to service economies.
Reality Check: Is Trump right about US trade deficit?
The US exported $242.7bn worth of services in 2017, in areas like banking, travel and tourism.
Services account for 90% of the US economy. China, in contrast, doesn't export nearly as many services as it does manufactured goods.
So the president's obsession with trade deficits is not always popular, with critics damning the administration's moves as protectionism.
Trump constantly worries about the trade deficit - should we?
What's protectionism?
Protectionism is trying to use restrictions such as tariffs to boost your country's industry, and shield it from foreign competition.
Take Mr Trump's steel and aluminium tariffs.
At the start of March, before his latest moves against China, the president announced a 25% tariff on all steel imports, and 10% on aluminium.
The Trump administration claims the US relies too much on other countries for its metals, and that it couldn't make enough weapons or vehicles using its own industry if a war broke out.
Critics point out the US gets most of its steel from Canada and the EU - staunch US allies.
In theory, taxing foreign steel and aluminium will mean US companies will buy local steel instead.
The thinking is that will boost the US steel and aluminium industries, as more companies will want to buy their goods.
Steel and aluminium prices will go up in the US because there will be less of these goods coming in from abroad - so the greater demand for local steel will push up the price, lifting profits for steel makers.
Protectionism: What Trump has in common with Lincoln and Ferris Bueller
The number of people employed in the US steel industry fell by almost 50,000 between 2000 and 2016
But does it work?
Sort of.
US steel makers could get a boost - demand will drive new hires and bigger profits.
But the US companies that need raw materials, like car and aeroplane makers, will see their costs rise.
Could Trump tariffs damage US steel?
Steel tariffs - what impact will they really have?
That means they might have to put up the prices on their finished products. That would hurt consumers.
So car prices could go up in the US. As could prices for gadgets, plane tickets and even beer - the price of making a can could rise.
Making beer cans could become more pricey - and that cost could be pushed onto consumers
How could tariffs affect me?
They could affect people around the world - especially since China has retaliated.
The world's second-largest economy has taxed US agricultural and industrial products, from soybeans, pork and cotton to aeroplanes, cars and steel pipes.
Charting the US-China trade battle
How a US-China trade war could hurt us all
In theory, China could also tax US tech companies like Apple. That would hit the tech giant, and it could be forced to raise its prices to compensate.
A global trade war could hurt consumers around the world by making it harder for all companies to operate, forcing them to push higher prices onto their customers.
Is free trade better then?
Depends who you ask.
Free trade is the opposite of protectionism - it means as few tariffs as possible, giving people the freedom to buy cheaper or better-made products from anywhere in the world.
This is great for companies trying to cut costs, and that's helped drive prices down and boost the world economy.
Free trade has led to a vast expansion of shipping and transfer of goods around the world
Cars, smart phones, food, flowers - free trade has brought affordable products from around the world to your home.
But at the same time, that means companies are less likely to buy local products. Why buy domestic when you can get more, cheaper, from a different country?
This means the loss of jobs in wealthier countries, and uneven growth - while free trade has made some people richer, it's made others poorer.
How is it all going to end?
No idea.
Historians have pointed out that tariffs often lead to higher costs for the consumer, while economists across the board are against the plans.
The Republican Party is also overwhelmingly against Mr Trump on tariffs - they're big supporters of free trade.
Mr Trump's decision to take on China could lead to adverse effects for consumers in the US and in China, but also worldwide.
An economic showdown between the world's biggest economies doesn't look good for anyone.
Trump hails 'really good' trade deal with Mexico - BBC News
August 28, 2018.
Trump hails 'really good' trade deal with Mexico
Donald Trump speaks with the Mexican leader on the phone through an interpreter
The US and Mexico have agreed to revamp Nafta, the North American Free Trade Agreement, in what Donald Trump called a "really good deal" for both countries.
The US President, who has frequently criticised the existing deal, made the announcement on Monday.
Canada - the other member of Nafta - is yet to agree to the new terms and will hold more discussions on Tuesday.
Mr Trump had threatened to pull out of the deal, triggering a year of talks.
He demanded a renegotiation of the 1994 trade agreement, which he blames for a decline in US manufacturing jobs, especially in the car industry.
US shares rose and the Mexican peso strengthened on news of the preliminary deal on Monday.
What has Trump said?
Mr Trump said the US and Mexico had agreed on terms that would make for a deal that was "much more fair".
Negotiators have been rewriting the Nafta treaty over the past year, but in the past five weeks, Canada has not been part of the discussions.
"We will see whether or not we decide to put up Canada or just do a separate deal with Canada," Mr Trump said.
He also threatened Canada with tariffs on cars and said he wanted to get rid of the name Nafta, which he said has "bad connotations".
Where does Canada stand?
Canadian Prime Minister Justin Trudeau has had a "constructive conversation" with Mr Trump since the deal with Mexico was announced, his office said.
Canadian foreign minister Chrystia Freeland is expected to travel to Washington DC for talks on Tuesday.
US President Trump announced the new trade deal in front of a Mexican delegation
Why now?
Negotiators want to agree a deal before the newly elected Mexican president, Andres Manuel Lopez Obrador, takes office in December. He has been reluctant to continue Enrique Pena Nieto's police of opening up of Mexico's energy sector, which could complicate negotiations.
In order to meet that deadline, the Trump administration must present Congress with a deal at least 90 days in advance - meaning the deadline is this Friday.
However, Mr Obrador said on Monday that the two-way agreement with the US was just the first step in a new treaty.
"We're very interested in it remaining a three-country deal," he said. "The free-trade agreement should remain as it was originally conceived."
Will Canada join?
A spokesman for Ms Freeland said the country was "encouraged" by the progress made by the US and Mexico but did not comment on the specific terms.
The US and Canada have been at loggerheads on a range of trade matters, including Canadian protections for its dairy industry and US tariffs on steel and aluminium.
"We will only sign a new Nafta that is good for Canada... Canada's signature is required," said spokesman Adam Austen.
A senior US trade official said: "There are still issues with Canada but I think they could be resolved very quickly."
In a televised telephone call with Mr Trump, Mr Pena Nieto stressed the importance of an agreement that includes Canada.
However, Mexican foreign minister Luis Videgaray said his country was prepared to strike a bilateral US-Mexico deal.
What's in the agreement?
Nafta covers more than $1tn (£780bn) in annual trade.
The update is to include provisions to govern intellectual property, digital trade and investor disputes, among other issues.
In the preliminary agreement announced on Monday, the US and Mexico agreed that 75% of a product must be made in the two countries to receive tax-free treatment - higher than in the existing deal.
If Nafta trade deal was a hamburger...
On cars, the two sides also settled on rules that will require 40% to 45% of each vehicle to be made by workers earning at least $16 an hour to discourage firms from moving production to lower-wage Mexico.
The pact would last for 16 years, the US said, and be reviewed every six years - but will not carry the threat of automatic expiration.
Politicians in all three countries have the final say over trade agreements.
In the US, Republicans, who typically support free trade, have pressed the White House to strike a deal, arguing that the relatively open borders have benefited American farmers and other groups.
'It would be a disaster for Texas'
Where does Trump's 'America First' leave Canada?
Senator John Cornyn, a Republican from Texas, called the development a "positive step", adding: "Now we need to ensure the final agreement brings Canada into the fold and has bipartisan support."
The US Chamber of Commerce also said it was critical that the agreement continued to include Canada.
Trump hails 'really good' trade deal with Mexico
Donald Trump speaks with the Mexican leader on the phone through an interpreter
The US and Mexico have agreed to revamp Nafta, the North American Free Trade Agreement, in what Donald Trump called a "really good deal" for both countries.
The US President, who has frequently criticised the existing deal, made the announcement on Monday.
Canada - the other member of Nafta - is yet to agree to the new terms and will hold more discussions on Tuesday.
Mr Trump had threatened to pull out of the deal, triggering a year of talks.
He demanded a renegotiation of the 1994 trade agreement, which he blames for a decline in US manufacturing jobs, especially in the car industry.
US shares rose and the Mexican peso strengthened on news of the preliminary deal on Monday.
What has Trump said?
Mr Trump said the US and Mexico had agreed on terms that would make for a deal that was "much more fair".
Negotiators have been rewriting the Nafta treaty over the past year, but in the past five weeks, Canada has not been part of the discussions.
"We will see whether or not we decide to put up Canada or just do a separate deal with Canada," Mr Trump said.
He also threatened Canada with tariffs on cars and said he wanted to get rid of the name Nafta, which he said has "bad connotations".
Where does Canada stand?
Canadian Prime Minister Justin Trudeau has had a "constructive conversation" with Mr Trump since the deal with Mexico was announced, his office said.
Canadian foreign minister Chrystia Freeland is expected to travel to Washington DC for talks on Tuesday.
US President Trump announced the new trade deal in front of a Mexican delegation
Why now?
Negotiators want to agree a deal before the newly elected Mexican president, Andres Manuel Lopez Obrador, takes office in December. He has been reluctant to continue Enrique Pena Nieto's police of opening up of Mexico's energy sector, which could complicate negotiations.
In order to meet that deadline, the Trump administration must present Congress with a deal at least 90 days in advance - meaning the deadline is this Friday.
However, Mr Obrador said on Monday that the two-way agreement with the US was just the first step in a new treaty.
"We're very interested in it remaining a three-country deal," he said. "The free-trade agreement should remain as it was originally conceived."
Will Canada join?
A spokesman for Ms Freeland said the country was "encouraged" by the progress made by the US and Mexico but did not comment on the specific terms.
The US and Canada have been at loggerheads on a range of trade matters, including Canadian protections for its dairy industry and US tariffs on steel and aluminium.
"We will only sign a new Nafta that is good for Canada... Canada's signature is required," said spokesman Adam Austen.
A senior US trade official said: "There are still issues with Canada but I think they could be resolved very quickly."
In a televised telephone call with Mr Trump, Mr Pena Nieto stressed the importance of an agreement that includes Canada.
However, Mexican foreign minister Luis Videgaray said his country was prepared to strike a bilateral US-Mexico deal.
What's in the agreement?
Nafta covers more than $1tn (£780bn) in annual trade.
The update is to include provisions to govern intellectual property, digital trade and investor disputes, among other issues.
In the preliminary agreement announced on Monday, the US and Mexico agreed that 75% of a product must be made in the two countries to receive tax-free treatment - higher than in the existing deal.
If Nafta trade deal was a hamburger...
On cars, the two sides also settled on rules that will require 40% to 45% of each vehicle to be made by workers earning at least $16 an hour to discourage firms from moving production to lower-wage Mexico.
The pact would last for 16 years, the US said, and be reviewed every six years - but will not carry the threat of automatic expiration.
Politicians in all three countries have the final say over trade agreements.
In the US, Republicans, who typically support free trade, have pressed the White House to strike a deal, arguing that the relatively open borders have benefited American farmers and other groups.
'It would be a disaster for Texas'
Where does Trump's 'America First' leave Canada?
Senator John Cornyn, a Republican from Texas, called the development a "positive step", adding: "Now we need to ensure the final agreement brings Canada into the fold and has bipartisan support."
The US Chamber of Commerce also said it was critical that the agreement continued to include Canada.
Yemen conflict: UN experts detail possible war crimes by all parties - BBC News
August 28, 2018.
Yemen conflict: UN experts detail possible war crimes by all parties
The conflict in Yemen has been raging for years - but what is it all about?
UN human rights experts believe war crimes may have been committed by all parties to the conflict in Yemen.
In their first such report, they allege Yemeni government forces, the Saudi-led coalition backing them, and the rebel Houthi movement have made little effort to minimise civilian casualties.
They point to the bombing and shelling of schools, hospitals and markets, in which thousands of people have died.
The coalition's air and naval blockade may also be a war crime, they warn.
The experts will present their report to the UN Human Rights Council next month.
On Monday, the coalition accused the UN of bias for condemning two air strikes on Houthi-controlled areas that are reported to have killed scores of Yemeni children.
Spokesman Turki al-Malki said the UN's information was based on "rebel stories".
Yemen has been devastated by a conflict that escalated in early 2015, when the Houthis seized control of much of the west of the country and forced President Abdrabbuh Mansour Hadi to flee abroad.
Aftermath of an attack that shocked the world
Alarmed by the rise of a group they saw as an Iranian proxy, the UAE, Saudi Arabia and seven other Arab states intervened in an attempt to restore the government.
Almost 10,000 people - two-thirds of them civilians - have been killed and 55,000 others injured in the fighting, according to the United Nations.
The fighting and a partial blockade by the coalition has also left 22 million people in need of humanitarian aid, created the world's largest food security emergency, and led to a cholera outbreak that is thought to have affected a million people.
Yemen conflict: UN experts detail possible war crimes by all parties
The conflict in Yemen has been raging for years - but what is it all about?
UN human rights experts believe war crimes may have been committed by all parties to the conflict in Yemen.
In their first such report, they allege Yemeni government forces, the Saudi-led coalition backing them, and the rebel Houthi movement have made little effort to minimise civilian casualties.
They point to the bombing and shelling of schools, hospitals and markets, in which thousands of people have died.
The coalition's air and naval blockade may also be a war crime, they warn.
The experts will present their report to the UN Human Rights Council next month.
On Monday, the coalition accused the UN of bias for condemning two air strikes on Houthi-controlled areas that are reported to have killed scores of Yemeni children.
Spokesman Turki al-Malki said the UN's information was based on "rebel stories".
Yemen has been devastated by a conflict that escalated in early 2015, when the Houthis seized control of much of the west of the country and forced President Abdrabbuh Mansour Hadi to flee abroad.
Aftermath of an attack that shocked the world
Alarmed by the rise of a group they saw as an Iranian proxy, the UAE, Saudi Arabia and seven other Arab states intervened in an attempt to restore the government.
Almost 10,000 people - two-thirds of them civilians - have been killed and 55,000 others injured in the fighting, according to the United Nations.
The fighting and a partial blockade by the coalition has also left 22 million people in need of humanitarian aid, created the world's largest food security emergency, and led to a cholera outbreak that is thought to have affected a million people.
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