China initiated a new trade hearing at the World Trade Organization after the US authorities applied new import duties on 800 items of Chinese goods.
The PRC Ministry of Commerce announced that it had filed a complaint to the WTO after the Trump administration applied new import duties on China based on the United States Trade Act of 1974.
“China has officially initiated proceedings in the WTO in connection with the introduction of US duties on the basis of Article 301.”
On Friday, July 6, US authorities applied a 25% duty on imports of goods from China for a total of $ 34 billion. The Chinese Ministry of Commerce said that with these actions, “the US violated WTO rules and initiated the largest” trade war “in history.
In early April, the WTO reported that China had asked for the commencement of commercial proceedings within the organization, noting that the actions of the US authorities “do not comply with WTO standards.”
Fitch: trade war could cost US 0.5% of GDP
According to the ratings agency Fitch Ratings, the US economy will suffer significant losses in case of escalation of trade confrontation with other countries.
The published Fitch report outlines various scenarios for the further development of the trade conflict initiated by the Trump administration. The agency notes that in response to new import duties, similar measures will be followed by China, the EU and other key US trade partners.
Fitch Ratings chief economist Brian Colton notes that if Trump threatens to impose additional $ 200 billion in duties on Chinese goods, China will introduce mirror tariffs on American goods for almost the same amount ($ 188 billion).
The aggravation of the trade conflict, in particular as a result of the application of duties of 25% on foreign cars, according to analysts, could lead to the collapse of US negotiations on the North American Free Trade Area (NAFTA) with Canada and Mexico and Washington’s withdrawal from this agreement. At the same time, in total, the exchange of import duties will affect world trade in the amount of $ 2 trillion.
Fitch believes that as a result of an exchange of trade restrictions, the US may face a “shock scenario” in which import prices for certain goods for Americans rise by 35-40%, which will result in a direct loss of US GDP of about 0.5% .
Risks to Global Growth Rise as Trade Tensions Escalate #Fitchwire https://t.co/sICB1LotL3 pic.twitter.com/LNDC0lQsVY
– Fitch Ratings (@FitchRatings) July 3, 2018
China encouraged companies to increase imports from other countries instead of the USA
The Chinese authorities said that one of the responses of China to import duties from the United States is to change the structure of imports and increase purchases of a number of goods from other countries.
At a July 9 press conference, a spokesman for the Chinese Ministry of Commerce announced that the authorities “considered replacing imported products and the overall impact on trade and investment.”
As a response, China will “encourage the adjustment of the import structure of Chinese companies.” In particular, the authorities will stimulate an increase in agricultural imports “in other countries and regions.”
This is stated in a press release from the Ministry of Commerce of China.
Among the American goods imported by Chinese companies in Beijing, soybeans, watercraft, and automobiles are noted.
The ministry also noted that the profits from China’s retaliatory duties will mainly be aimed at minimizing damage to Chinese enterprises and their employees.
Tesla will lose US state subsidies by 2020
The tax deductions that apply when purchasing electric vehicles in the U.S. will no longer apply to Tesla products by the end of 2019.
According to Reuters, state subsidies begin to decline after companies reach a sales figure of 200 thousand cars. After that, tax deductions for loans for the purchase of electric vehicles are reduced by 50% every next 6 months and completely cease to operate after 18 months from the moment of reaching sales of 200 thousand cars.
The current tax deduction for purchasing electric vehicles in the United States is $ 7,500. On the Tesla website, in the section for car purchase benefits, it is noted that these benefits are valid until December 31, 2018. After that, from January 1, 2019 to June 30, 2019 tax deductions will be reduced to $ 3,750. From July 1 to December 31, 2019, the amount of deductions will decrease to $ 1,875. After that, the benefits are terminated.
The Verge portal noted that Tesla will be the first automaker to lose state subsidies for the purchase of electric vehicles.
The Reuters agency also noted that the General Motors concern will soon also lose similar state subsidies. As of July 1, GM sold a total of 184 thousand different models of electric vehicles. As a result, other companies, such as Mercedes-Benz, BMW and Audi, will have an advantage over American brands in promoting their electric car models.