WASHINGTON (Reuters) - U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet on Saturday to seek an end to a costly trade war between the world’s largest economies.
The United States has demanded wide-ranging economic reforms from China, including providing better protection for American intellectual property, ending subsidies that favor Chinese state-owned enterprises, and improving access to China’s markets for U.S. companies.Trump has imposed tariffs on $250 billion of Chinese imports and is threatening to extend those to cover another $300 billion of goods - effectively everything China exports to the United States.China has retaliated with tariffs on U.S. imports.
Trump has said bad trade deals, with China and others, have cost millions of American jobs. Below are some of the costs of Trump’s push to rewrite the terms of global trade, with China and other top trade partners:
Tariffs have disrupted international supply lines, roiled global financial markets and encouraged manufacturers to invest in plants outside China.
It is impossible to calculate the precise costs, as many companies do not detail the reasons for changes in their business models or manufacturing locations, nor disclose the financial costs of the trade war.
Fitch Ratings estimates that extending tariffs to cover another $300 billion in Chinese goods would chop 0.4 percent from world economic output.
The International Monetary Fund has forecast a 0.5 percent reduction, equivalent to the gross domestic product of South Africa’s economy.
Swiss bank UBS said in a report this week that the escalation in U.S. tariffs could reduce global growth by 75 basis points over the subsequent six quarters, an impact that would resemble a mild global recession.
Trump has said that China pays the tariffs he has imposed on Chinese goods. That is untrue. The tariff are paid by importers of Chinese goods into the United States, which are for the most part U.S. companies. They are paid to U.S. Customs.
Many companies pass that cost onto buyers and consumers of their products in the United States.
From early 2018 through May 1, those tariffs cost U.S.-registered importers $23.7 billion, according to U.S. government data.
American farmers have been among the hardest hit so far. China is the top market for many of their biggest crops and Beijing hit those crops with retaliatory tariffs. The Chinese tariffs targeted U.S. farmers because they helped vote Trump into power.
The single biggest agricultural export from the United States are soybean sales, most of which went to China before the trade war.
To compensate for lost sales to China, the U.S. government has rolled out two rounds of trade aid for farmers, expected to total $28 billion by the time they are done. As of June 24, the United States had shelled out about $8.6 billion of that.
U.S. soybean exports to all countries fell to about $14.1 billion from July 2018 to April 2019, down 27 percent from $19.3 billion in the same period a year earlier, the most recent government data show. Exports to China alone were down 81 percent at just $2.1 billion, from nearly $11 billion from July to April a year earlier.
The trade war has hit sales of a wide range of agricultural produce, including fresh fruit, meat and grains. Pro-trade group Farmers for Free Trade estimates that pistachio growers alone have lost $380 million due to the tariffs.
Chinese telecommunications giant Huawei [HWT.UL] has said U.S. restrictions on its business would cost the company around $30 billion.
Tariffs are costing the U.S. tech sector $1.3 billion a month, the Consumer Technology Association said in a written statement to the United States Trade Representative in June.
Products for 5G mobile technology were hit by $122 million tariffs in the month of October 2018 alone, surging from just $65,000 a year earlier, the trade group said.
Apple Inc AAPL.O cut its fiscal first-quarter sales forecast, blaming slowing iPhone sales in China, where uncertainty around U.S.-China trade relations has hurt the economy.
Chipmaker Intel Corp INTC.O in May reduced its revenue forecast for 2019, citing a slowdown in demand from China.
Consumer tech will continue to be in the crosshairs if the presidents fail to reach an agreement at the G20.
The U.S. plan for more tariffs would raise the retail price of cellphones by an average of $70, the price of laptop computers by $120 and video game consoles by $56, a representative for the Consumer Technology Association said at a hearing this week.
Trump’s steel and aluminum tariffs have added billions of dollars to the cost of assembling U.S. vehicles, and tariffs on Chinese-made parts have also hiked costs.
General Motors Co GM.N, the largest automaker in the United States, projects it will incur $1 billion in extra costs for tariffs and raw materials.
Fiat Chrysler Automobiles NV FCHA.MI also expects dramatically increased costs for commodities due to tariffs, costing the automaker 750 million euros ($852.53 million).
Ford Motor Co F.N said that it lost about $750 million because of tariffs. Lower sales volume and increased commodity costs added $500 million to first-quarter costs over the prior year.
Motorcycle manufacturer Harley-Davidson HOG.N was hit by retaliatory tariffs from the European Union for the metals tariffs. The company calculates spending $100 million to $120 million on EU- and China-related tariff costs in 2019.
Motor home maker Winnebago Industries Inc WGO.N said it expected at least $10 million in added cost pressures in fiscal 2020 from the latest tariffs and proposed duties.
Recent numbers from industry analyst J.D. Power say that U.S. auto sales are expected to drop 1.5% in June 2019 because of increased prices.
In May, Deere said it missed quarterly profit estimates for the fifth straight quarter and cut its full-year outlook, as an escalating U.S.-China trade war threatens to further hit farm incomes and demand for the company’s equipment.
OTHER RISING COSTS
Steel and aluminum tariffs were among the first to be levied by the United States in early 2018 and included imports from almost the entire world.
The move benefited U.S. steel producers, but not the manufacturers that process the metal.
The tariff burden on U.S. steel and aluminum buyers was almost $5 billion last year, according to the American Action Forum.
Home appliance maker Whirlpool Corp WHR.N said in its quarterly earnings report that higher prices for imported steel and aluminum had cut into their profits, but cushioned the blow by raising prices.
($1 = 0.8797 euro)
Reporting by Jonas Ekblom in Washington; Additional reporting by Chris Prentice in New York and Karl Plume in Chicago; Editing by Simon Webb and Jonathan Oatis
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