President Donald Trump escalated his trade dispute with China and is planning for $200 billion worth of Chinese goods to be subjected to an additional 10% tariff. In turn, China said it would slap the US with tariffs on $50 billion worth of US imports starting in July. China's tariffs would target energy and agricultural products, such as ornamental fish, whiskey, and coal — which would affect some states more than others. There are eight US states that exported more than $1 billion worth of tariff-eligible goods to China in 2017. President Donald Trump escalated his trade dispute with China earlier this week, ordering the US Trade Representative to compile a list of $200 billion worth of Chinese goods to be subjected to an additional 10% tariff. Trump's decision came three days after he announced tariffs on $50 billion worth of Chinese goods that would be subject to a 25% tariff. In turn, China said it would slap the US with tariffs on $50 billion worth of US imports starting in July. China's tariffs would target energy and agricultural products, such as ornamental fish, whiskey, and coal — which would affect some states more than others. Business Insider used US Commerce Department data to determine the number of tariff-eligible goods from each state shipped to China in 2017. Because of the US database's limitations, the totals include some foreign-sourced goods that may not be subject to China's tariffs. Those goods represent a small portion of the overall values. Additionally, the database measures exports using a system called Origin of Movement. This measures where exports are sent from rather than where they are produced. While research shows that Origin of Movement can be a solid proxy for production, the Census Bureau data may provide an undercount for some upstream producers. For instance, some farmers in the Midwest ship their soybeans to Louisiana for transport, which increases the count for Louisiana. Given the fact that Louisiana still relies on the shipping and sales for its economy, the data is still helpful to evaluate the pain from the tariffs — but it may undercount the lost value to some upstream producers. There are eight US states that exported more than $1 billion worth of tariff-eligible goods to China in 2017:<doc-sep>Donald Trump has called on China to capitulate to U.S. demands on trade. The problem is nobody knows exactly what Trump actually wants — including the Chinese. One week, he condemns threats to American national security interests and the next, agrees to lift a ban on doing business with Chinese telecom giant ZTE. He rails about the U.S. trade deficit with China, then dismisses Beijing’s offer — negotiated by his own officials — to boost its purchases of U.S. goods by billions of dollars. Beyond the feints and jabs, he’s raised so many different issues that it’s hard to know what his priorities might really be. The strategy is straight out of “The Art of the Deal”: “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.” But some doubt that approach translates to negotiating with a global superpower. By all accounts, it has left the Chinese increasingly mystified about what Trump really wants at a pivotal moment when the world’s two largest economies are teetering on the edge of sustained trade warfare. “They’re absolutely confused,” Derek Scissors, a resident scholar at the American Enterprise Institute, said of the Chinese. Without clear demands, he argued, Beijing is unlikely to offer much. “The concession has to get them something. And they don’t know what they’re going to get because the U.S. doesn’t have a strategy.” Sign up for Morning Trade A speed read on global trade news — weekday mornings, in your inbox. Email Sign Up By signing up you agree to receive email newsletters or updates from POLITICO and you agree to our privacy policy and terms of service. You can unsubscribe at any time and you can contact us here. This sign-up form is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Chinese officials, for their part, are increasingly blunt about their frustration. “We appeal our American interlocutors to be credible and consistent,” Li Kexin, minister at the Chinese embassy in Washington, said in a speech Tuesday at the Institute for China-America Studies. “When you agree, you mean it.” And on Friday, Gao Feng, spokesman for China’s Ministry of Commerce, criticized the U.S. as “capricious.” Trump’s aggressive approach is a reversal from more than a decade of U.S. policy toward China, which involved negotiating on a suite of business issues every year to make incremental progress. Any gains were secured largely by convincing Beijing that a more open economy was ultimately in its best interests — a tactic that worked very slowly and only to a point. The president’s willingness to antagonize China more directly has largely been embraced by the U.S. companies and workers desperate for quicker and more substantial results. But veterans of international negotiations are skeptical that negotiations will succeed unless they’re more clearly focused. “Yes, they have a plan. No, I don’t think it will work,” said Bill Reinsch, a senior adviser at the Center for Strategic and International Studies. “The plan is always push harder, demand everything and offer nothing.” The underlying structure of China’s economy is the cause of many of U.S. companies’ most intractable complaints, something that won’t change in a matter of weeks or even months. Beijing makes U.S. companies jump through more hoops than domestic companies. It conducts cyber espionage and steals U.S. trade secrets and intellectual property, like patents. And the Chinese government subsidizes its companies on a grand scale, guaranteeing that they can sell goods below a market-set price. All of these policies have been identified by the Office of the U.S. Trade Representative as the impetus for new tariffs set to be imposed on $50 billion in Chinese goods. But across the ideological spectrum, China watchers are worried the president’s laser-like focus on the trade deficit may lead him to lose focus on seeking structural changes to the Chinese nonmarket system. “This is a multiyear process that involves a lot of pain,” Scissors said. “If you don’t want to face the pain and take the time, then don’t do it.” Chinese officials have similarly cautioned that this negotiation may take years. “Let’s talk about it, no matter on trade deficit or structural issues,” Li said. Adding to the confusion, senior administration officials have said they don’t know exactly what Trump will decide to say or do on trade at any given moment. That uncertainty has led advisers to compete for his attention in a bid to sway him, which leads to varied tactics and mixed messaging. Officials like National Economic Council Director Larry Kudlow have indicated the goal is to knock down barriers to U.S. exports, such as tariffs. But under the rules of the World Trade Organization, China is bound to give the United States the same tariff treatment as every other WTO member, making negotiations on the reduction of duties difficult. Meanwhile, the new U.S. tariffs, aimed at extracting concessions from the Chinese, were designed largely as a response to intellectual property theft, with a nod to China’s policy of propping up companies in particular sectors. China responded to the announcement of those tariffs by scheduling duties on U.S. goods that mirror the size and timing of the administration’s action. On Tuesday, Trump responded by threatening to slap tariffs on as much as $450 billion in Chinese goods. The administration is also planning next week to place new investment restrictions on the Asian nation. On Friday, Gao Feng, spokesman for China’s Ministry of Commerce, criticized the U.S. as “capricious.” | Andy Wong/AP Photo “Increasingly, I’ve been asked by fairly high-level folks [in China] to just explain what is going on,” said Taiya Smith, who worked under former Treasury Secretary Hank Paulson to develop formalized trade talks between Washington and Beijing, then called the Strategic Economic Dialogue. In a press call on Tuesday, White House trade adviser Peter Navarro criticized Beijing’s offers thus far. “If they thought that they could buy us off with a few extra products sold and allow them to continue to steal our intellectual property and crown jewels, that was a miscalculation,” he said. “We hope going forward, there is no more miscalculation.” So what concessions might be enough? The clearest document outlining U.S. demands looked more like asks in negotiations on a comprehensive free trade agreement than a targeted deal aimed at heading off punitive tariffs. The administration in May said it wanted China to commit to reducing the trade deficit by $200 billion by 2020. It also asked China to stop subsidizing high-tech sectors like robotics and alternative energy vehicles identified in its China’s strategic economic plan, cut tariffs on “all products in non-critical sectors” to levels at or below U.S. duties and assure that it would not challenge U.S. actions taken in intellectual property disputes. Robert Lighthizer, Trump’s chief negotiator, said at the time that it wasn’t his goal to “change the Chinese system,” despite his long list of criticisms of that system. “If they want to do it, that’s fine, but I have to be in a position where the United States can deal with it, where the United States isn’t a victim of it,” he said. A source familiar with the negotiations said Lighthizer and Navarro both seem to be of the view that China is not going to change, and so they’re taking action to protect the U.S. market. It’s possible, the source added, that a lot of the new trade restrictions will simply remain in place. Trump himself has railed repeatedly against the massive trade deficit between the U.S. and China, which stood at $566 billion in 2017. He’s also nodded to China’s practice of forcing companies to hand over valuable technology and data. “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” Trump tweeted in April. “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!”<doc-sep>The first border skirmishes in the U.S.'s simmering international trade war have been relatively contained. But that could change quickly if the conflict spreads to the primary resource powering the global economy — oil. So far, U.S. President Donald Trump has taken aim at China with billions in tariffs for alleged intellectual property theft. China, not surprisingly, has responded in kind. Steel and aluminum shipments to the U.S. have also found themselves in Trump's crosshairs, forcing U.S. allies, including Canada, to announce tariffs of their own targeting everything from Harley-Davidsons to blue jeans to Kentucky bourbon — even gherkins. The oil market has so far avoided the conflict and any collateral damage. But as the Organization of the Petroleum Exporting Countries wraps up its three-day biannual meeting in Vienna today, it's worth considering the potential threats to the uneasy peace. The tariff fight between Chinese President Xi Jinping, left, and U.S. President Donald Trump could have major repercussions for other countries if China targets U.S. oil, analysts say. (Nicolas Asouri, Mark Wilson/Getty Images) Since 2017, the cartel has been uncharacteristically united, with member nations agreeing to limit their output of crude by almost two million barrels a day to help push up prices. But crude prices have since rebounded by more than 30 per cent, and OPEC leader Saudi Arabia is reportedly pushing to open the spigots a little. That's exactly what happened on Friday, as the group announced it plans to start pumping out an extra million barrels a day. A change like that is bound to affect the oil market, and the impact of all those extra barrels sloshing around will be even larger against the backdrop of global trade uncertainty. China's big arrow China and the U.S. seem to be going tit-for-tat with each other, but as Dan Flynn of the PRICE Futures Group explains, China has a disadvantage: "The Chinese are running out of U.S. imports to put a tariff on." The one big arrow left in their quiver, of course, is oil. The U.S. exports more than 300,000 barrels a day to China — about $1 billion US worth a month. Although they've yet to lay out concrete details, Beijing has threatened to slap a 25 per cent tariff on all U.S. oil imports. Laura Lau, senior portfolio manager with Toronto's Brompton Group, says if China follows through with its threat, it would essentially be stopping all U.S. oil imports to the country, "because they can just import it from somebody else for cheaper." A big candidate to fill that shortage would be OPEC member Iran. From Beijing's perspective, this would be the perfect thorn in Trump's side. In May, the Trump administration pulled out of the nuclear deal his predecessor had struck with Iran, and reimposed sanctions that effectively cut Iranian oil out of the global market. But Tehran is unlikely to sit idly by and not try to find a replacement buyer for its major export product. Especially if it can antagonize Trump in the process. As Iranian oil minister Bijan Namdar Zanganeh said as the group met Friday, "we are not here to receive instruction from President Trump and apply it and implement it." The crude from Canada's oilsands is very similar to what comes from Venezuela, which has seen its production plummet. This could create an opportunity for Canadian suppliers to fill the gap at Gulf Coast refineries. (Jeff McIntosh/Canadian Press) While China isn't an OPEC member, Lau says it's a good bet that China and Iran will come together on the sidelines of the meeting and strike a deal for Iranian crude, and possibly cut out the U.S. entirely. "If anything, they'll probably get more from the Iranians just to piss off the Americans," Lau says. "They may even get a discount for it." That could also be music to the ears of another traditional American adversary — Russia. The Kremlin has gone along with OPEC's production cuts since they were first proposed in 2016. Canadian impact While the prospect of a trade war typically isn't good for anyone, there could be opportunities for Canadian oil producers amid the uncertainty. OPEC member Venezuela has seen its output plummet because of its ongoing economic crisis. Many refineries on the U.S. Gulf Coast are calibrated to process the thick, heavy oil that Venezuela produces — which is very similar to the type that comes from Alberta's oilsands. Dan Eberhart, CEO of Florida-based oilfield services company Canary, says he's concerned about the state of the Canada-U.S. trade relationship, but he does see a "hand in glove" opportunity for Canadian oil companies to supply more crude to those refineries. As for OPEC, Eberhart expects the cartel to continue to act in its own interest, especially with an even more hostile adversary than usual in the White House. "They are being forced to examine this new Trump era and how America First is going to affect them," he says. Trump's global tariffs on oil could affect everything from the price of oil and the distribution of it, as countries adjust to the new reality. @DanKEberhart of Canary LLC explains how his oilfield services company's been hit so far, and what may come next. pic.twitter.com/ojb5sMvO41 —@OnTheMoneyCBC Thanks to Trump's sabre-rattling, it's not hard to imagine a drastically realigned global oil market, with countries like China, Saudi Arabia, Iran and Russia working together on one side, and the U.S. on the other. (Canada will probably find itself somewhere in the middle.) The scenario shows why Trump needs to be wary of "unintended consequences," Lau says. "It's probably not what Trump expected to happen," she says, "but if you follow it to its logical conclusion, of course that's what's going to happen."<doc-sep>
China is ramping up its retaliation to President Donald Trump's massive tariffs. China is set to put tariffs on $34 billion worth of US exports to China, starting in July. The tariffs cover mostly energy and agricultural products but hit everything from goldfish to electric cars. The states that exported more than $1 billion worth of tariff-eligible goods to China in 2017 were Texas, Louisiana, Washington, California, Alabama, South Carolina, Illinois, and Kentucky. The collateral damage from President Donald Trump's trade fight with China could soon have some states feeling the squeeze. China announced tariffs on $50 billion worth of imports from the US in response to Trump's tariffs on Chinese imports, an escalation of the brewing trade war between the two countries. Also mirroring Trump's move, China's tariffs will be deployed in two waves — the first covering $34 billion worth of goods coming in early July. The Chinese tariffs are focused on energy and agricultural products, covering goods including ornamental fish, whiskey, and coal. By singling out certain goods, the Chinese are also hitting some states harder than others. To break down the effect by state, Business Insider used US Commerce Department data to determine the number of tariff-eligible goods from each state sent to China in 2017. Because of the US database's limitations, the totals include some foreign-sourced goods that may not be subject to China's tariffs. Those goods represent a small portion of the overall values. Additionally, the database measures exports using a system called Origin of Movement. This measures where exports are sent from rather than where they are produced. While research shows that Origin of Movement can be a solid proxy for production, the Census Bureau may provide an undercount for some upstream producers. For instance, some farmers in the Midwest ship their soybeans to Louisiana for transport, which increases the count for Louisiana. Given the fact that Louisiana still relies on the shipping and sales for its economy, the data is still helpful to evaluate the pain from the tariffs — but it may undercount the lost value to some upstream producers. There are eight states that exported more than $1 billion worth of tariff-eligible goods to China in 2017: Texas: $8,022,380,040 Louisiana: $6,627,390,388 Washington: $5,231,988,100 California: $4,560,897,434 Alabama: $2,620,256,485 South Carolina: $2,588,390,677 Illinois: $2,123,222,976 Kentucky: $1,006,565,148 Many of these states have just a handful of goods that make up most of the coming pain. Similarly, for Alabama, $1.9 billion of the state's $2.6 billion in tariff-eligible goods is small-engined vehicles. In Texas, the biggest hit will come from crude oil (the state sent $3.7 billion worth to China last year) and propane; the state shipped $1.7 billion worth of that to China last year.