Trade war threats get real as US and China impose tariffs

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Donald Trump has turned his threats of a trade war into reality. (Photo: AP)

 

US President Donald Trump fired the biggest shot yet in the global trade war by imposing tariffs on $US34 billion ($46 billion) of Chinese imports. China immediately said it would be forced to retaliate.

The duties on Chinese goods started at 12:01 am Friday in Washington (2:01 pm AEST), which was just after midday in China. Another $US16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $US550 billion, a figure that exceeds all of US goods imports from China in 2017.

US customs officials will begin collecting an additional 25 per cent tariff on imports from China of goods ranging from farming plows to semiconductors and airplane parts. China’s officials have previously said they would respond by imposing higher levies on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.

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BANK OF AMERICA: ‘This Is Not A Fluke’ — The Fed May Have To Ramp Up QE Again

“This is not a fluke: almost all of the underlying determinants of inflation point to weakness,” writes BofA Merrill Lynch economist Ethan Harris in a note to clients today.

For all of the talk of rising government bond yields and predictions for when the Federal Reserve will taper back its bond buying, Harris says, deflation is still a bigger risk than higher inflation – and disinflation could cause the Fed to actually ramp up QE if it continues. Continue reading