Trump tough talk on China wor­ries US ex­porters

Kuwait Times - - BUSINESS -

Pres­i­dent-elect Don­ald Trump’s threat to slap puni­tive tar­iffs on Chi­nese goods is a worry for firms that trade with the coun­try in the US Mid­west, a de­ci­sive re­gion in the Repub­li­can’s elec­tion tri­umph. Strong sup­port across Amer­ica’s “Rust Belt,” and frus­tra­tion at lost in­dus­trial jobs blamed on glob­al­iza­tion, car­ried Trump to vic­tory last month in key bat­tle­ground states, in­clud­ing Michi­gan and Ohio.

But some com­pa­nies in the re­gion that ben­e­fit from global trade are wor­ried about early signs the pres­i­dent-elect plans to take a hard­line stance with China. “We ex­port a lot of prod­ucts to China,” said David Shogren, pres­i­dent of US In­ter­na­tional Foods. “My fear is what­ever changes Trump makes ... that China will re­tal­i­ate in some ways.”

The St. Louis com­pany de­pends on China as a key ex­port mar­ket for peanut but­ter, mus­tard, nuts, ce­re­als and other items. About 50 per­cent of its rev­enues are tied to China, com­pared with just five per­cent to its home mar­ket. “Our cus­tomers may switch from US prod­ucts to other coun­tries: Europe, Aus­tralia, New Zealand or Ja­pan, or other ex­port­ing coun­tries,” Shogren said.

Shogren said his com­pany is try­ing to build mar­kets in South­east Asia, in­clud­ing Viet­nam, Malaysia and Sin­ga­pore. Trump dur­ing the cam­paign threat­ened to im­pose 45 per­cent tar­iffs on China, say­ing the world’s sec­ond big­gest econ­omy has stiffed the US with cur­rency ma­nip­u­la­tion and il­le­gal sub­si­dies. “China will take a tit-for-tat ap­proach,” said an ed­i­to­rial in Global Times, a Chi­nese news­pa­per that is close to the gov­ern­ment.

“A batch of Boe­ing or­ders will be re­placed by Air­bus. US auto and iPhone sales in China will suf­fer a set­back, and US soy­bean and maize im­ports will be halted,” it warned. “China can also limit the num­ber of Chi­nese stu­dents study­ing in the US.”

China also re­sponded sharply to Trump’s de­ci­sion to ac­cept a phone call from Tai­wan Pres­i­dent Tsai Ing-wen and to sug­ges­tions he is re­think­ing the decades-old US “One China pol­icy.”

The One China pol­icy is the “po­lit­i­cal bedrock” of re­la­tions with the US, Chi­nese for­eign min­istry spokesman Geng Shuang said. If it is “com­pro­mised or dis­rupted” co­op­er­a­tion in ma­jor fields would be “out of the ques­tion,” Geng added.

Writ­ing to Trump

Ohio-based Pro­gres­sive Mold­ing Tech­nolo­gies im­ports tool­ing from China that en­ables it to com­pete with Chi­nese ri­vals.“My fear is we will lose ac­cess to China’s cheap tools,” said pres­i­dent Laird Dauben­speck. “At that point, I will an­tic­i­pate the our cus­tomers will start to slow down new prod­uct launches and we will see less growth.”

Dauben­speck has writ­ten twice to Trump, once af­ter he was elected and a sec­ond time af­ter the Tai­wan phone call. “My big­gest fear is he doesn’t un­der­stand the im­pact his words have.”

Among big man­u­fac­tur­ers, Boe­ing is es­pe­cially vul­ner­a­ble. About one out of three Boe­ing 737 planes de­liv­ered in 2015 was des­tined for China. The com­pany just an­nounced Mon­day that it will re­duce pro­duc­tion of its 777 start­ing in Au­gust, which will have an im­pact on em­ploy­ment.

Gen­eral Mo­tors also could see its busi­ness dis­rupted in a trade war. China is GM’s big­gest mar­ket for cars, with 2.38 mil­lion ve­hi­cles sold in the first eight months of 2016, com­pared with 1.96 mil­lion in the US. GM also man­u­fac­tures the Buick En­vi­sion in China, which is ex­ported to the US and could suf­fer un­der US tar­iffs. A GM spokesman said it was too early to com­ment on any po­ten­tial shifts in trade pol­icy, but noted that GM chief ex­ec­u­tive Mary Barra agreed to par­tic­i­pate in Trump’s strate­gic and pol­icy fo­rum, along with other top chief ex­ec­u­tives.

The cen­tury-old Na­tional For­eign Trade Coun­cil on Mon­day said it will work with the new ad­min­is­tra­tion but will fight pro­tec­tion­ism. “And we’re pre­pared to ar­gue against the use of trade re­stric­tions as a way of achiev­ing greater eco­nomic growth-his­tory has shown that re­ally isn’t an ef­fec­tive way of do­ing that,” Rufus Yerxa, head of the 300-com­pany NFTC, whose mem­bers ex­port about $3 tril­lion a year. —AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.