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A trade war between China and the United States will only cause pain to both sides, China’s commerce minister warned over the weekend, reported Ejinsight (Hong Kong).

“A trade war would not benefit either country or either country’s people, you could say it would have no advantage whatsoever,” Zhong Shan said in Beijing on Saturday, Reuters reports.
“Many American and western friends think that China can’t live without the United States but that’s only half true,” Zhong was quoted as saying on the sidelines of China’s annual parliament session.

The “United States can’t live without China”, the minister said, noting that in the past ten years, the growth of US exports to China has outpaced the growth of Chinese exports to the United States.
Zhong said he looks forward to meeting his US counterpart Wilbur Ross.

Billionaire investor Ross was sworn in as US commerce secretary in February after helping shape President Donald Trump’s opposition to multilateral trade deals.
He is expected to start work on renegotiating trade relationships with China and Mexico.
“I am aware that Mr. Ross is an outstanding businessman and an experienced negotiator, an excellent person,” Zhong said on Saturday.
“I am willing to deal with excellent people because excellent people play the long game and think strategically.”

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The computer and electronic products and agricultural industries "seem to have the most to lose" if China retaliates against potential tariffs and trade barriers placed on its imports to the U.S., according to a research note published Monday by Wells Fargo Securities, reported US News.

Jay Bryson, a managing director and global economist at Wells Fargo, speculated on just what would happen to American-made goods should President Donald Trump make good on his promises to get tough on Chinese trade, thus forcing a response out of the Asian giant that now represents the second-largest economy in the world.
The results, Bryson said, wouldn't be great for U.S. exporters.

"Retaliation by China, should it occur, would be especially painful to the computer and electronic products industry as well as to agricultural producers who export to China," Bryson said, noting that "exports to China were equivalent to 4.5 percent of the output of the computer and electronic products industry and nearly 4 percent of U.S. agricultural production in 2015."

America's trade deficit with China in the third quarter of 2016 – the most recent period for which data are available – clocked in north of $76 billion, according to the Census Bureau. That's down nearly 9 percent from the same period a year earlier, but still represented America's largest trade shortfall with any one country.

In terms of goods alone, America's trade deficit with China last year eclipsed $347 billion.
"That said, American exports to China totaled $116 billion last year, making it the third-most important destination for American exports, behind only Canada and Mexico," Bryson said.

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In the aftermath of the stunning statement by Trump's top trade advisor, Peter Navarro, who indirectly warned that a currency, and therefore, trade war with Europe may be imminent after he told the FT what everyone else knows but is unwilling to admit, namely that Germany is using a “grossly undervalued” euro to which was like an “implicit Deutsche Mark” whose low valuation gave Germany "an advantage over its main partners", analysts are asking if this is the precursor to a third front in Trump's currency wars, which most recently included China and Mexico, reported Zero Hedge.

While one look at the rising European currency reserves driven by the soaring current account surplus, mostly out of Germany, suggests that Navarro's allegation that Germany is a currency manipulator does have some validity. But isolating the problem is only the first step: a full blown trade war with Europe, or Germany, would have profound consequences not just for the two counterparts, but the rest of the world.
Here are some further thoughts on this red hot topic, courtesy of SMI.

Is a U.S.-German Trade War Looming?
U.S. President Donald Trump's policies have begun to take shape, and Germany's strategy for reacting to them has already been made clear. Germany has long considered a strong alliance with the United States to be a cornerstone of its foreign policy, and it will do everything it can to protect that partnership. However, Germany will also take steps to protect its massive current account surplus — now the largest in the world — from becoming the next target of punitive trade measures.

Over the past five years, Germany's current account surplus (a figure that includes the country's trade balance) has almost doubled, reaching 256.1 billion euros ($274 billion) in 2015. Trump has accused Germany of not doing enough to increase its imports while having such a sizable trade surplus, and in October, the U.S. Treasury Department listed Germany as a country to watch because of its current account surplus. Germany's own eurozone peers have accused it of encouraging saving over consumption, slowing the currency area's recovery in the process.

Nevertheless, the United States can take a trade war with Germany only so far. Under U.S. law, Washington can introduce temporary safeguards to protect domestic industries threatened by certain imports. But these safeguards can target only imports, rather than specific countries, and Germany would immediately challenge them in the World Trade Organization. Should the Trump administration try to single out Germany, it would have to successfully argue that Berlin is supporting German exporters unfairly and then slapping countervailing duties on German exports.

If the United States were able to effectively target German exports, Berlin would take its appeal to the American people. In theory, it could argue that higher tariffs on German products would only increase costs for U.S. consumers. Also, Berlin will remind American workers that many German companies, including BMW, Volkswagen and Siemens, have U.S. divisions that employ many Americans and use products from U.S. companies in their supply chains.

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If President Donald Trump makes good on threats to gut NAFTA and impose stiff tariffs on Mexican goods, economists say he risks a trade war that could lead to the very thing he is hoping to avoid — a huge surge in Mexican migration to the United States, reported Fox News (US).

The result would be catastrophe for the Mexican economy: Recession. A dramatic weakening of the peso, even below the historic lows it has already set amid Trump's bellicose rhetoric. Soaring inflation, interest rates and unemployment.

"Mexico is smaller than the U.S. and can be harmed by conflict more than the U.S. would be," said Adam Posen, president of the Peterson Institute for International Economics, a Washington think tank that supports free trade.

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