China Retaliates After U.S. Tariff Hike Officially Takes Effect

Howard TerryJul 09, 2018

Companies from China and the United States are concerned about the impact of trade tensions between the world's top two economies after the United States began imposing a 25-percent additional tariff on Chinese products worth US$34 billion Friday. They kicked in just after midnight ET, which is noon in Beijing.

If the trade war escalates on July 20 and both countries levy further tariffs on $16 billion of goods, Korea's exports to China will likely shrink an additional $190 million and exports to the US will shrink by $47 million.

Even the first round of tariffs means that "American consumers are one step closer to feeling the full effects of a trade war", said Matthew Shay, president of the National Retail Federation.

Beijing insists it's the injured party.

"China will not bow in the face of threats and blackmail", he said, adding if Washington acts, China will "fight back to defend the core interests of the country and the interests of the people". It is not a negotiating ploy to push other countries into a trade deal with the United States, because Trump announced this war by withdrawing from trade deal negotiations. As China opted to respond in the first round of tariffs, the ball is now back in US President Donald Trump's court, said Huang, who observed that the US had initiated Section 301 trade action against China several times in the past, in 1991, 1994, 1996 and 2010. Investors also shrugged off concerns over an escalating trade war between the USA and China. The transnational company has many branches and plants across China.

Asian markets erased earlier losses to finish mostly higher as the uncertainty ended over whether Washington would escalate tensions with Beijing.

Beijing had said it would retaliate with punitive measures on USA products worth a similar amount, including soybeans, pork and cotton, but it had not officially confirmed on Friday that they had taken effect.

In the run-up to Friday, there was no sign of renewed negotiations between US and Chinese officials, business sources in Washington and Beijing said.

Many products have suddenly become more expensive.

The stock market's benchmark index, the S&P 500, posted two consecutive weekly declines heading into this week as investors anxious over rising global trade tensions. Tracy Grondine, a spokesperson for the US Apple Association, said China is a market that has "significant growth potential" for US-based apple farmers.

Trump has warned that he may eventually impose tariffs on more than $500 billion of Chinese imports.

Soybean farmers, apple growers and auto workers are among the USA workers bracing for fallout from a trade war between the United States and China. -China trade dispute is unlikely to have a major impact on the Korean economy. Trump went to a school specifically formed to deny the benefits of free markets and global trade, and I'll give him credit for being a good student: He didn't learn the things they didn't want to teach him.

The Trump administration has also applied tariffs on steel and aluminum from allies like Canada and Mexico and has threatened to abandon the North American Free Trade Agreement with those two countries.

Consider what happened to the price of washing machines that were subjected to a separate series of Trump tariffs in January.

That's why analysts have raised eyebrows at the trade war that Trump has started and stoked.

Most employers see the economy as having achieved a comfortable cruising speed and have kept hiring. "I think the market will be fine", said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

Economic Development Minister Maxim Oreshkin said in a statement Friday that additional tariffs ranging from 25 to 40 percent have been applied to some road construction equipment, oil and gas equipment, metal processing instruments, drilling equipment and optical fiber. "At that point, the U.S. will be more interested in negotiations, and the Chinese side will also want to come to the table". On each occasion, both parties managed to reach a resolution.

The European Union says it will soon take action to prevent steel produced for the US market from flooding into Europe due to tariffs introduced by President Donald Trump.

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