Wow. Go Wilburine! U.S. Commerce Secretary Wilbur Ross has slapped a whopping $4.4 billion countervailing duty on Chinese cabinet manufacturers. The rate of manufacturing subsidy identified within the ‘wood cabinet‘ study shows a massive 229% subsidy rate via discounted land, free lumber, electricity, raw materials, direct grants from government and discounted loans from Chinese banks to enhance export incentives.

The current study and duty only applies to wood cabinets and vanities, but if you ever wondered how come Chinese furniture is so cheap, well, it’s not a stretch to consider those same subsidy rates likely apply to their household furniture and wood products.

(Bloomberg) Add $4.4 billion in imported cabinets to the long list of Chinese goods slapped with U.S. levies in the escalating trade dispute between Washington and Beijing. The Commerce Department said Tuesday it will ask the U.S. Customs and Border Protection to collect cash deposits from importers of the wooden cabinets and vanities from China based on subsidy rates of as much as 229%. Commerce issued a preliminary determination in response to a petition filed earlier this year by the American Kitchen Cabinet Alliance, alleging at least $2 billion in harm from the Chinese shipments.

The petition alleged dumping margins of more than 200%. Tim Brightbill, a trade lawyer from Wiley Rein LLP in Washington representing the industry, said in March that Chinese exporters get double-digit subsidy margins based on the number of programs supporting their domestic industry, including discounted land, electricity, raw materials, grants, discounted loans and export incentives. “Today’s determination gives the American kitchen cabinet industry the hope it needs in our fight against China’s unfair trade practices,” Stephen Wellborn, director of product and research development at U.S. manufacturer Wellborn Cabinet and a member of the American alliance, said in an emailed statement. (more)

That $4.4 billion is a pretty hefty duty within a relatively small manufacturing sector. Can you imagine if anyone has filed a trade/manufacturing complaint against the much larger ‘wood furniture’ and household goods? Jumpin’ ju-ju bones.

In related news a lot more exporters operating manufacturing in China are starting to see the writing on their noses, realizing that Trump tariffs are only going to get worse, and are making plans to get the heck out of China, ASAP.

(CMP) Traditional export manufacturers in China’s Pearl and Yangtze River Delta regions already struggling under the weight of existing tariffs levied by the Trump administration expect the new tariffs on US$300 billion of Chinese imports to cause their businesses to shrink, force them to lay off workers, and for some, speed up relocation plans. (more)

Think of China like a big lake filled with U.S. dollars and economic value; the result of our purchases of their products. Through his ASEAN discussions with Vietnam, S Korea, Malaysia, Singapore, Australia, Japan, et al, President Trump has stealthily built a thin levy, an ASEAN dam of sorts, that will direct the China lake of economic value into Southeast Asia.

At any given moment Trump can blow that dam by triggering bigger tariffs. The exodus will benefit those who partnered with Trump. Vietnam’s economy has jumped over eight percent so far this year…. almost exclusively as a result of companies leaving China.

China has no substantive tools in their economic armory to defend against President Trump in a one-on-one battle. And Trump keeps landing body blows, the latest was the seizure of all Venezuelan assets. The number one investor in Venezuela is China (by a mile). China owns 49% of PDVSA Venezuela’s state owned oil company as an example.

The labeling of China as a currency manipulator opens the door to even more sanctions, and Beijing has no measurable way to respond. Beijing can threaten other trade partners, but more than China everyone wants access to the U.S. market; so no-one wants to become a target for Trump by standing near Xi Jinping or engaging in transnational shipping.

(On Devaluation) Shen Jianguang, chief economist at JD Digit and a veteran Chinese economy watcher, said the timing is not good for Beijing to allow the yuan to slide below seven, and that a currency war would not favour China.

“It is not in China’s interest to escalate the trade war into currency or financial fields,” Shen said. “The countermeasures available for Beijing are quite limited.” (more) .