Trump rejects fears of lengthy trade war
Farmers hit hard as US soya bean exports to China fall to 16-year low
WASHINGTON/BEIJING/SHANGHAI: US President Donald Trump dismissed fears of a protracted trade war with China despite a warning from Beijing that labelling it a currency manipulator would have consequences for the global financial order.
Mr Trump, who announced last week he would slap a 10 per cent tariff on a further US$300 billion (S$415 billion) in Chinese imports from Sept 1, tweeted that "massive amounts of money from China and other parts of the world" were pouring into the US economy.
He also pledged to stand with US farmers in the face of Chinese retaliation.
China has halted US agricultural purchases and raised the possibility of additional tariffs on US farm products.
US farmers, a key political constituency for Mr Trump, have been among the hardest hit in the trade war.
Shipments of soya beans, the most valuable US farm export, to top buyer China sank to a 16-year low in 2018.
St Louis Federal Reserve Bank president James Bullard said the US central bank may be stuck with a volatile global trade environment for years.
"I think of trade regime uncertainty as simply being high in the current environment," Dr Bullard said at a National Economists Club luncheon.
"I do not expect this uncertainty to dissipate in the quarters and years ahead."
The Trump administration wants to continue trade talks with China and is still planning to host a Chinese delegation for talks next month, Mr Larry Kudlow, director of the White House National Economic Council, told CNBC.
He said movement towards an agreement could change the outlook for US tariffs, adding: "It takes two to tango."
The US-China dispute had already spread beyond tit-for-tat import tariffs to other areas such as technology, and analysts caution retaliation could worsen, weighing further on business confidence and global economic growth.
Global Times, a tabloid published by the ruling Chinese Communist Party's People's Daily, said the US had taken the action purely out of a political motive to "vent its anger".
Chinese state media had warned Beijing could use its dominant position as a rare earths exporter to the US as leverage. The materials are used in everything from iPhones to military equipment.
Shares in some of China's rare earth-related companies surged on Tuesday amid speculation the sector could be the next front in the trade war.
Beijing could also step up pressure on US companies in China, analysts said.
China's Commerce Ministry also announced that its companies had stopped buying US agricultural products in retaliation against Washington's latest tariff threat.
The Trump administration already has rolled out up to US$28 billion in federal aid for US farmers since the trade war began last year, and the Agriculture Department has made US$8.6 billion of direct aid payments to them. - REUTERS