This article supplements our "Global Trade At A Crossroads: China-U.S. Tariff Dispute Still A Skirmish, But Credit Risks Are Rising," published April 5, 2018. MELBOURNE (S&P Global Ratings) April 6, 2018--The U.S. announcement that it may impose tariffs on another $100 billion of unspecified Chinese imports further raises the stakes in the China-U.S. trade dispute. This action draws the countries even nearer to an all-out trade war, according to S&P Global Ratings. We still hold the view that the potential near-term effects on corporate credit are likely to be muted. Admittedly, though, some industries could be more affected (see "Global Trade At A Crossroads: China-U.S. Tariff Dispute Still A Skirmish, But Credit Risks Are Rising," April 5, 2018, for details of these sectors). A greater threat is the dispute expanding beyond tariffs on goods. A breakdown in negotiations and policy missteps could spiral into a trade war, damaging global business and consumer confidence, investment prospects, and growth. On April 5, 2018, the U.S. President instructed the Office of the U.S. Trade Representative (USTR) to consider whether tariffs on an additional $100 billion on Chinese good imports would be appropriate under Section 301 of the Trade Act of 1974. The USTR has described China's proposal to impose tariffs on $50 billion of U.S. exports to China, including agricultural products, as unjustified. The total value of Chinese goods possibly subject to U.S. tariffs is now $150 billion. This is equivalent to a substantial 30% of the $505 billion of China's exports to the U.S. Overnight, China had initiated a World Trade Organization (WTO) dispute resolution procedure over U.S. tariffs on steel and aluminum. China's proposal to levy tariffs on $50 billion of U.S. goods represents 38% of the $130 billion in U.S. exports to China. This leaves a further $80 billion of U.S. goods to China that are not covered by China's tariffs, yet. RELATED RESEARCH
- Global Trade At A Crossroads: As China Threatens Retaliatory Tariffs On U.S. Agricultural Products, Which Ratings Are Most At Risk? April 6, 2018
- Global Trade At A Crossroads: China-U.S. Tariff Dispute Still A Skirmish, But Credit Risks Are Rising, April 5, 2018
- Economic Research: The U.S. Economic Outlook Is Solid, But Will Trade Tensions Have The U.S. Trading Places Soon?, March 29, 2018
- Global Trade At A Crossroads: If U.S. Tariffs Trigger A Trade War With China, Corporate Credit Will Suffer, March 24, 2018
- Economic Research: What Will Be The Likely Impact Of U.S. Steel And Aluminum Tariffs On Latin America?, March 20, 2018
- S&P Global Economists Release A "Field Guide" To A Potential Sino-U.S. Trade War, March 19, 2018
- Credit Trends: Global Bond Upgrade Potential: Will Trump Tariffs Affect The Metals, Mining, And Steel Sector's Lead In Upgrade Potential?, March 15, 2018
- Credit FAQ: Japan's Top Steelmakers Can Withstand U.S. Tariffs And Increasingly Aggressive Investments, March 12, 2018
- Global Trade At A Crossroads: U.S. States And Localities May Take Another Look At Budget Forecasts, March 9, 2018
- Global Trade At A Crossroads: U.S. Steel And Aluminum Tariffs Raise Risk Of Retaliatory Spiral, March 9, 2018
- Global Trade At A Crossroads: U.S. Steel And Aluminum Tariffs Will Likely Have Small Direct Impact But Risk Larger Knock-On Effects, March 9, 2018
- Trump Tariffs Forge Better Credit Quality For U.S.-Based Steel And Aluminum Producers With A Protectionist Stance, March 2, 2018
- De-Globalization Could Disrupt U.S. Supply Chains, May 30, 2017
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