China's record trade surplus with U.S. adds fuel to trade war fire


The new round of tariffs would come on top of the $200 billion in tariffs the administration has said will be imposed as a result of China's retaliation to the first $50 billion of tariffs.

China's trade surplus with the United States widened to a record in August even as the country's export growth slowed slightly, an outcome that could push President Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute.

Mr Trump has boasted that trade wars are "easy to win" and warned he would hit virtually all Chinese imports if Beijing does not back down and take steps to reduce its US$335 billion surplus with the US.

The implementation of tariffs on US$200 billion of products from China "will take place very soon depending on what happens", Trump told reporters on Air Force One on Friday. To a certain extent its going to be up to China, Trump said. "That changes the equation".

The moves would sharply escalate Trump's trade war with Beijing over his demands for major changes in economic, trade and technology policy.

Stock prices slipped after his comments, with the S&P 500 off 0.2 percent, while China's off-shore trade yuan currency fell against the dollar.

"The moving higher", Lawrence Kudlow, director of the National Economic Council, said on CNBC.

While China's trade surplus with the United States grew again, it remained stable with the rest of the world at US$27.9 billion in August.

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Earlier this week, Apple said in a regulatory filing that the president's proposed $200 billion in fresh tariffs on China would cover "a wide range of Apple products", from its Mac Mini computer to cables, chargers and laptop cases.

"There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the US economy", said Zhang Yi, an economist at Zhonghai Shengrong Capital Management.

"More broadly, tariffs will lead to higher US consumer prices, lower overall USA economic growth, and other unintended economic consequences".

But, they'd also be hit by the threatened 267 billion dollar list.

Both countries have already slapped levies on $50 billion of each other's exports, and China promised on Thursday to respond to any U.S. escalation with "necessary countermeasures".

"We will continue to talk to China. We want lower (trade) barriers across the board".

"These are basically fiscal subsidies to offset the negative impacts of the tariffs", said Li Yishuang, a Shanghai-based economist at China Securities Finance Co. "(Our) asks have not been satisfied", he said.