Fears of disaster for world economy

‘THERE WILL BE NO WINNERS IN TRADE WAR’ Warning comes as US considers tariff increases for metals.

Any trade war with the United States will only bring disaster to the world economy, Chinese Commerce Minister Zhong Shan said yesterday, as Beijing stepped up its criticism on proposed metals tariffs by Washington amid fears it could shatter global growth.

After pressure from allies, the United States has opened the way for more exemptions from tariffs of 25% on steel imports and 10% on aluminium that US President Donald Trump set last week.

On Saturday, the European Union and Japan urged the United States to grant them exemptions from metal import tariffs, with Tokyo calling for calm heads.

But the target of Trump’s ire is China, whose expansion has created a global steel glut. China has repeatedly vowed to defend its “legitimate rights and interests” if targeted by US trade actions.

Zhong, speaking in parliament, said they do not want a trade war and will not initiate one.

“There are no winners in a trade war,” Zhong said. “It will only bring disaster to China, the United States and the world.”

Trump’s announcement on tariffs underlined concerns about rising US protectionism, which has sparked bouts of turmoil in global financial markets over the past year as investors feared a damaging trade spat will shatter a synchronised uptick in world growth.

China’s metals industry issued the country’s most explicit threat yet in the row, urging the government on Friday to retaliate by targeting US coal – a sector that is central to Trump’s political base and his election pledge to restore American industries and blue-collar jobs.

The US is the world’s biggest importer of steel, purchasing 35 million tonnes of raw material in 2017. Of those imports, South Korea, Japan, China and India accounted for 6.6 million tonnes.

Trade tensions between China and United States have risen since Trump took office. China accounts for only a small fraction of US steel imports, but its massive industrial expansion has helped create the global surplus that has driven down prices.

Trump believes the tariffs will safeguard American jobs, though many economists say the impact of price increases for users of steel and aluminium, such as the auto and oil industries, will destroy more jobs than curbs on imports create.

Nonetheless, there is growing bipartisan consensus in Washington, and support within some segments of the US business community, for the US government to counter what are seen as Beijing’s predatory industrial policies and market restrictions on foreign firms.

Trump’s administration has said the United States mistakenly supported China’s membership in the World Trade Organisation in 2001 on terms that have failed to force Beijing to open its economy.

Diplomatic and US business sources say the Trump administration has frozen a formal mechanism for talks on commercial disputes with China because it is not satisfied Beijing has met its promises to ease market restrictions. –