USA has 'launched the largest trade war in economic history': China

07 July, 2018, 02:56 | Author: Lora Ball
  • Soybean plants grow in a field near Tiskilwa Illinois

The Trump administration contends that China has deployed predatory tactics in a push to overtake U.S. technological dominance.

Together, the two rounds - $34 billion and $16 billion - would comprise the $50 billion in tariffs that Trump announced in May, citing China's alleged theft of intellectual property, forced technology transfer and other industrial policies that favor China's domestic businesses and hurt USA firms.

Beijing insists it's the injured party.

China's Commerce Ministry said it would be "forced to make a necessary counterattack". It accused the United States of "typical trade bullying".

But in response to a 25% tariff on $50 billion worth of Chinese goods imposed by the Trump administration, Beijing retaliated by slapping tariffs worth $34 billion on 545 American goods - including soybeans.

The tariffs would mark a significant escalation in the trade dispute between the world's two biggest economies.

American companies doing business in China are particularly anxious.

China accused the USA of launching the "largest trade war in economic history", saying it was "typical trade bullying" that could trigger "global market turmoil".

Hours before Washington's deadline for the tariffs to take effect, US President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of US imports from China past year.

The extent of the economic damage will depend on how far both sides go.

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The White House said it would consult on tariffs on the other $US16b of products, and would apply these later. In fact, the scuttlebutt in Washington is that the Chinese were keen on making a deal to whittle down their surplus by pledging to buy $200 billion worth of American goods during talks in May, but the US President instructed his negotiators to seek ironclad guarantees, not just promises.

The Commerce Ministry didn't immediately provide details as to whether and when its pledge to introduce reciprocal tariffs on USA imports would be introduced, creating an air of optimism in financial markets that the trade war may not escalate quickly.

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports.

"If the United States starts imposing additional tariffs, it will actually be charging taxes on firms both in China and around the world, as well as American companies", Feng, said at a news conference in China.

Beijing denies it's in the wrong and says it's ready to fight a trade war until the end.

The Chinese government has said it will protect the "legitimate interests" of foreign businesses in China and lessen the fallout from a China-US trade war, in an apparent attempt to ease fears that Beijing could single out US businesses for retaliation.

The tariffs target a broad spectrum of Chinese goods - such as passenger vehicles, radio transmitters, aircraft parts and computer hard drives - from industries Washington says have benefited from unfair trade practices.

"China is the largest trading partner with the Port of Oakland and our exporters and importers are concerned about the potential effect of a trade war", said Mike Zampa, the Port of Oakland Communications Director. Simmering trade tensions between the world's top two economies are set to erupt into a full-blown trade war on July 6, with Washington poised to impose new tariffs on $34 billion in Chinese goods. President Donald Trump's tariffs are meant to pressure Beijing to reform its trade policies. The newspaper quoted observers as saying there was "anecdotal evidence" of a build-up in sanctions against U.S. businesses.

Gov. Rick Scott and other Florida officials have kept a fairly low profile as Trump pursues policies he says will even the playing field for US producers.

China's imports from the USA were just US$130 billion past year and so Beijing does not have the capacity to hit back in kind, raising speculation it could respond by creating administrative headaches for companies in China.

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