China says US ‘opening fire’ on the world with tariff threats

Eileen GuzmanJul 06, 2018

Trump for President, Inc., the committee organizing Trump's reelect run, has publicly committed to buying American, saying that "we put America First and take great pride in selling 100% Made in the U.S. products to our supporters throughout the country".

After months of simmering tension between the world's two largest economies, the USA looks poised to impose tariffs on US$34 billion worth of Chinese goods on Friday. "Security personnel have detained and/or deported US citizens for sending private electronic messages critical of the Chinese government".

This hegemonic mentality is unsafe for the world economy, which requires close cooperation and normal competition, not a damaging trade war, to achieve sustainable growth.

China responded by threatening tariffs on $50 billion worth of USA exports to China, mostly aimed at agricultural goods.

Economists and various experts have warned for months of the risks to the global ecomony posed by a trade war between the United States and China.

"Put simply, the USA is opening fire on the world - and itself", Chinese Ministry of Commerce spokesperson Gao Feng said on Thursday. Farmers in the overwhelmingly red Midwest fear they will lose access to China's lucrative market and be left with the bill for excess produce and livestock.

For the time being, analysts say it's hard to see either side backing down.

Uncertainty hangs over companies, supply chains and investment plans, he said. The overall value mirrors US tariffs, which also are set to kick in on Friday.

Chinese exporters of tools, lighting and appliances say USA orders have shrunk as customers wait to see what will happen to prices. Since June, agents have taken a closer look at every product. "Changes in trade policy could cause us to have to question the outlook", he said during a panel talk in Portugal. "The real battle will be on the flanks" - in the form of unnecessary inspections, product quarantines and heightened regulatory scrutiny.

But equally likely to be affected from the fallout of a full blown trade war are the economies of a number of countries that are tightly integrated into the global value chain - which companies increasingly use to fragment production of their goods.

Chinese retailers told Reuters they probably would raise prices or spurn USA imports for domestic substitutes, which could eventually hurt their businesses.

"The clock is ticking until Friday's trade war threats become a reality", Jasper Lawler, head of research at London Capital Group said in a note.

"The tariffs won't solve the problem, but they will damage US interests". -China trade deficit that has soared in recent years.

US companies had US$256 billion in investment in China by the end of previous year, exceeding China's US$140 billion in the United States, according to a report by the National Committee of US-China Relations and Rhodium Group in April. On April 4, China fired back.

The US will implement a 25% tariff on $34bn of Chinese imports - on 818 product lines ranging from cars to vaporisers and "smart home" devices - on Friday.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying USA coal and heading for China was diverted on Wednesday to Singapore. USA manufacturers and business groups have said the tariffs could increase their costs and lead to higher prices for consumers.

"My hope is that with this start, people will feel that the cost is too great and we will not move on to the second wave", he said.

As the deadline approached with little sign of a last-minute deal, US stocks pared gains. The Trump administration stated that the tariffs are created to hit industries identified by the Chinese government's Made in China 2025 initiative, which aims to build up certain high growth sectors.

"Trade wars are good", Trump recently tweeted, "and easy to win".

But the European Union, the world's largest trading bloc, has rejected the idea of allying with Beijing against Washington, five European Union officials and diplomats told Reuters, ahead of the summit.

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