Trump threatens China with more than $500bn in USA trade tariffs

Roman Schwartz
July 6, 2018

The United States imposed the first duties on $34 billion in Chinese goods early Friday, officially launching a trade war between the world's two largest economies.

Speaking on Air Force One, during his visit to Montana on Thursday, Mr. Trump said additional Chinese products worth $ 16 billion would face additional duties "in two weeks".

China's commerce ministry, in a statement shortly after the USA deadline passed at 04:01 GMT on Friday, said that it was forced to retaliate, meaning imported United States goods including cars, soybeans, and lobsters also faced 25 per cent tariffs. China's soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.

The complex web of commercial ties under threat has raised the prospect of a global trade war, sending financial markets tumbling.

"If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it's going to have a big impact for both countries", Chen said.

Flags of U.S. and China are placed for a meeting between Secretary of Agriculture Sonny Perdue and China's Minister of Agriculture Han Changfu at the Ministry of Agriculture in Beijing, China June 30, 2017.

Gerard Bottino/CrowdSpark/NewscomBegun, the trade war has.

The back-and-forth trade battle between the world's two largest economies will likely be damaging to the United States economy according to trade experts, ths fact was not lost on the Chinese.

There was no evidence of any last-minute negotiations between USA and Chinese officials, business sources in Washington and Beijing said.

Chinese Commerce Ministry spokesman Gao Feng said on Thursday that the proposed US tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work. Chinese manufacturers have already been hit by a strengthening yuan that has made exports more expensive.

The dollar slid early Friday, even after a stronger-than-expected jobs report. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

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Carmaker BMW said it could not absorb all of the 25% tariff on the cars it exports to China from a plant in Spartanburg, South Carolina and would have to raise prices. If that were to persist, it could potentially disrupt imports of key products such as pork and soybeans.

The Trump administration is "behaving like a gang of hoodlums", it says.

After that, the hostilities could intensify: Trump said the U.S.is ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing refuses to yield to US demands and continues to retaliate.

A second tranche of 284 goods worth $16 billion is now under review and could be added to the United States list.

He added: "We have $200 billion in abeyance and then. we have $300 billion in abeyance. OK?"

Trump and Canadian Prime Minister Justin Trudeau traded barbs over the steel tariffs at a farcical summit of the G7 richest countries that ended on June 9. "A little fighting may be the only way the Trump administration clears its mind and allows everyone to sober up", the state-run Global Times said on Friday.

"Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it".

"China imposed counter-tariffs on some import products from the United States at 12:01 pm Friday immediately after new U.S. tariffs took effect, the country's customs authority said".

China's tariff list is heavy on agricultural goods such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 USA election, such as Texas and Iowa.

Rob Carnell, chief Asia economist at ING, said: "This is not economic Armageddon".

Stanley Chik, from Bright Smart Securities International in Hong Kong, said that "the impact of tariffs on economic growth appears limited for now, giving the market a breathing spell".

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