Trump’s tariffs alive, China hits back; US cut trade deficit for third month
InvestingOnline.com
6/07/2018, 22:36The United States President Donald Trump’s tariffs measures kicked in midnight Friday with new 25%-tax duty on $34 billion of annual imports from China. The answer was clear: China hit back with retaliatory tariffs on some imports from the US.
Beijing responded with levy tariffs on US imports; however, the Asian Country didn’t provide details on the retaliation. Xinhua, the Chinese state news agency, reported the country would use the same 25% tariff rate on US products.
At the same time, China’s Ministry of Commerce said that they didn’t want to “fire the first shot,” but after the US “launched the largest trade war in economic history,” they are forced to respond. “This act is typical trade bullying.”
President Trump said this week that another $16 billion of tariffs are expected to take place by mid-July. The US government is planning to impose taxes in $500 billion in Chinese goods. China is preparing to respond in kind.
The US reduces its trade balance deficit on May
May Trade Balance US July 6
In the news, the United States narrowed its deficit by around 6.6% in May to $43.1 billion, the smallest level since October 2016 and $3 billion down from $46.1 billion in April. Market expectations were about a deficit of $43.7 billion.
The US trade deficit has narrowed for three consecutive months after hitting a 10-year high of $55.54 billion in February. Analysts are worrying that Trump will find validation for his tariffs in the smaller trade gap, extending the trade war.
According to the Bureau of Economic Analysis, “May exports were $215.3 billion, $4.1 billion more than April exports. May imports were $258.4
billion, $1.1 billion more than April imports.”
Soybeans exports jumped by nearly $2 billion to $4.14 billion in May, accounting for almost half of the total increase in exports. However, Starting next week, soybeans will be subject to a 25% tariff at Chinese ports.
The deficit with China was $32 billion, while the gap with the European Union was $11.9 billion, Japan was 6 billion and Mexico was $5.8 billion.
The United States posted surpluses with South and Central America with $3.6 billion, Hong Kong +$2.8 billion, Singapore +$0.9 billion and Brazil +$0.8 billion.
