USA fires next shot in China trade war

Howard TerryJul 14, 2018

China promised to lodge complaints at the World Trade Organization but didn't detail what its retaliatory measures would be.

"This act is typical trade bullying", a spokesperson for China's Ministry of Commerce said in a statement. "To protect the core interests of the nation and its people, China's government is, as in the past, forced to retaliate".

On Tuesday, the US Trade Representative's office announced a $200bn list of Chinese goods for possible 10 percent tariffs including fish, apples and burglar alarms. The US omitted some high-profile items like mobile phones.

The news sent stocks tumbling, with China's markets leading the declines.

Chinese officials are expected to retaliate in other ways, hitting us firms in China with unplanned inspections, delays in approving financial transactions and other administrative headaches.

The latest round of proposed tariffs come a few days after the USA government unveiled procedures for companies to apply for exclusions from the first round of tariffs, which went into effect July 6.

The conflict is "far from over", warned Hannah Anderson of JP Morgan Asset Management in a report, "and the impact will be global".

And added, "China's export sector will, therefore, suffer a significant deterioration in export competitiveness to the U.S. compared to other emerging markets' manufacturing exporters, such as Vietnam, South Korea, Thailand, Bangladesh, Mexico, and Brazil,". "It's up to them to open the door again".

Washington made a decision to impose the extra tariffs after efforts to negotiate a solution to the trade dispute failed to reach an agreement, senior administration officials said on Tuesday.

High-level talks between the world's two largest economies starting in May failed to deliver a breakthrough to head off a trade war.

The move came after U.S. President Donald Trump said last week the United States may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of U.S. imports from China previous year.

Tariffs are hurting American consumers instead of resolving trade issues with China, National Retail Federation president and CEO Matthew Shay says.

Washington accuses Beijing of stealing or pressuring companies to hand over technology and worries plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.

Thousands of Chinese imports are under threat in the newly suggested tariffs, including hundreds of food products as well as vehicle tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.

Additionally, they cover bags and boxes; building products, luggage and include some categories of plastic machinery and molds apparently not covered in previous tariffs.

China immediately retaliated with duties on the same value of USA goods, including soybeans and cars. While China matched tariffs on US$34 billion in goods, dollar-for-dollar, state media coverage of the trade war has been relatively subdued.

NAM urged the Trump administration to negotiate a trade treaty with China. "But China's reaction to the United States tariffs could pose a far greater threat to the index in time".

The US is planning to implement 25 per cent tariffs on a further $US16 billion worth of Chinese imports within the next fortnight.

"Trump's escalation of trade hostilities makes it increasingly hard to envision an exit path from an all-out trade war".

Chinese tactics, the administration says, include outright cybertheft and forcing USA companies to hand over technology in exchange for access to the Chinese market.

Scott Lincicome, a trade lawyer for the group Republicans Fighting Tariffs, said tariffs on $200 billion would amount to a "multibillion-dollar tax on American businesses and families" and prompt China to retaliate against American exporters.

"The action from the U.S. is hurting China, hurting the whole world and also hurting the USA itself", the ministry said in a statement.

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