Economy

It's war: China, US trade blows through tariffs

It's war: China, US trade blows through tariffs

China's commerce ministry said it was forced to retaliate, meaning imported USA goods including cars, soybeans and lobsters also faced 25 per cent tariffs.

Trump and his advisers argue the tariffs are necessary to pressure China into abandoning unfair practices such as stealing intellectual property and forcing American companies to hand over valuable technology.

China accused the United States on Thursday of "opening fire" on the world with tariffs set to take effect on Friday, warning that it will respond the moment that duties on $34 billion in Chinese goods kick in.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union.

"After the United States imposed its tariffs, China also took effective measures", said Chinese Foreign Ministry spokesperson Lu Kang.

Lynn Rohrscheib, chairwoman of the Illinois Soybean Growers, who farms near Moweaqua, called Friday for a return to free trade and access to the Chinese market. We buy stuff from America, and America is buying stuff from China.

Trump needs to be careful that he doesn't go too far and cross a red line and he's very close to doing that right now.

United States president Donald Trump also warned that he might ultimately target over $500 billion worth of Chinese goods, including apparel products, based on China's reaction on USA decision on duty imposition.

The U.S.is still negotiating trade arrangements with Mexico, which is the second largest soy consumer after China.

Chinese President Xi Jinping (left) and US President Donald Trump in Florida a year ago. He added the U.S. is ready to target an additional $200 billion, and then $300 billion more should Beijing retaliate.

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The US Chamber of Commerce says some states will have billions of dollars worth of exports at risk. The first took effect July 6 covering 808 items-mostly information and communication technology products and machinery equipment-worth US$34 billion.

That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States past year.

"If we lose that, my son will spend the rest of his lifetime trying to get that back", he said.

Despite three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump chose to go ahead with the tariffs.

And signs are growing that the escalating global trade dispute is already affecting the world's top economy, with punitive duties now in place for steel and aluminium and the White House threatening to slap duties on auto imports.

Until now, only $3bn of tariffs have taken effect, but President Trump has threatened new tariffs on many occasions. "The real battle will be on the flanks", in unnecessary inspections, quarantines, and heightened scrutiny, said James Zimmerman, a partner in the Beijing office of Perkins Cole LLP, an global law firm, the Post reported.

"But it's the risk of escalation - specifically Trump's $500 billion dollar threat, which would cover almost all of China's exports to the USA - that has analysts anxious", Yanmei said.

Trump has for years slammed what he describes as Beijing's underhand economic treatment of the United States, with the U.S. trade deficit in goods with China ballooning to a record $375.2 billion last year. "What we will likely see happen in the short-term is apples that were destined for export markets will instead overhang the USA market", she said. The damage could also spread to other economies, hurting business confidence and prompting companies to delay investments.

"Our view is that trade war is never a solution", Chinese Premier Li Keqiang told reporters during a trip to Bulgaria. Both countries have warned that more tariffs could come soon. But both sides have dug in, and it is unclear what the offramp is for leaders in either country. Imaging vendors ship complete systems back to the US for sale, or send subsystems made in China back to the USA for integration into finished products.


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