MoneyNewsTop News

China vs US: the confrontation is just beginning

UNITED STATES (OBSERVATORY) –┬áThe “trade war” between China and the United States is not over yet. Despite a temporary lull, the situation may worsen at any time. The Trump Administration is already planning to increase trade pressure on China, the Wall Street Journal reports.

Next week, the States will expand the list of Chinese goods and services, which are subject to additional import duties. It will include goods of increased demand – cell phones, clothing and footwear of Chinese production.

In addition, the US Treasury Department, on behalf of President Trump, is preparing measures to significantly limit the investment of Chinese private companies in the latest American technology.

The main task of the Trump administration is to slow down the dynamic development of China’s industrial industries, based on the system of state subsidies.

Since March 23, the US has introduced new duties on steel and aluminum products – 25% for steel and 10% for aluminum. They are valid for all countries that supply products to the United States, however, until May 1, Australia, Argentina, Brazil, Canada, Mexico, the Republic of Korea, and also the countries of the European Union received a delay.

A new stage of aggravation in the trade relations between Washington and Beijing began on April 3, when the Trump administration announced a list of products from China, for which an additional 25% of the duty is planned. In response, the State Council of the PRC published a list of 106 names of American products, for which duties will be introduced in 25%. The entry into force of the response directly depends on whether the US will introduce scheduled duties on Chinese goods.

China has already presented its options for retaliatory measures, and also said that the United States does not have a desire for dialogue. But Beijing has its own tools of pressure on Washington – primarily a huge amount of US government bonds. Experts believe that the PRC has already begun their sale.

This explains the sharp increase in yields on trezheris. On the eve of thirty-year securities, the figure exceeded 3%, for ten-year securities it rose above 2.8%. In addition, at the last auction, there was practically no demand from foreigners, which also confirms this theory.

China owns US debt of $ 1.2 trillion – more than any other country, so selling off US debt is a powerful tool of pressure. Already, the US budget deficit has increased by 15%. As noted by the US Budget Office, the cost of servicing the public debt has grown significantly.

According to the estimates of the department, in fiscal year 2018 the US budget deficit will be $ 804 billion instead of $ 563 billion, forecasted last summer.