China vows retaliation for US$200B U.S. tariff threat

Leroy Wright
July 13, 2018

Investor confidence started to return early this week amid a momentary lull in the trade war, following Beijing's retaliation tariffs on USA imports last week after Trump hit China with a 25 per cent tariff worth $34bn on imports.

But Tuesday's announcement that the administration would proceed with 10 percent tariffs on another $200 billion in Chinese goods as soon as September put an end to that more benign view, sending global markets tumbling on Wednesday.

Last week, Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of us exports to China.

The first USA tariff list focused on Chinese industrial products, an attempt to reduce the direct impact on American consumers.

TRADE FOCUS: China's government said it will take "firm and forceful measures" if the Trump administration goes ahead with its threat of tariff hikes on an additional $200 billion of Chinese goods.

Beijing recently indicated that its response to more tariffs would include "qualitative" measures, which many analysts interpreted as creating regulatory hurdles or even stoking anti-US sentiment among consumers of USA products. "Unfortunately, China has not changed its behavior - behavior that puts the future of the USA economy at risk". The US has suggested that it may ultimately impose tariffs on $500 billion worth of Chinese goods, or roughly the entire amount of US imports from China.

"We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy", Hatch said in a statement.

Mr Trump has been considering tariffs against China since his officials concluded in March that Beijing violates USA intellectual-property rights, such as by forcing American firms to hand over technology. Ryan singled out China as one of a number of countries that engage in unfair trade practices, but added, "I just don't think tariffs are the right mechanism" to resolve the problem.

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China bought $130 billion of USA goods past year.

The European Union Chamber of Commerce in China said this week its member companies are rearranging the global flow of their goods to make sure any bound for the United States don't pass through China. Beijing has vowed to retaliate dollar-for-dollar. "American retailers and the families we serve barely had time to process the barrage of tariffs implemented last week", vice-president of International Trade Hun Quach said in a statement.

The total US debt is over 18 trillion euros.

Jack Gerard, Cal Dooley, and Edward R. Hamberger-the president and CEO of the American Petroleum Institute, president and CEO of the American Chemistry Council, and president and CEO of the Association of American Railroads, respectively-wrote in an opinion piece in the Washington Examiner published on Wednesday that the trade war is threatening the USA economy and could add "hundreds of billions of dollars in potential costs for American businesses - costs that could ultimately be borne by consumers".

Among the potential ways Beijing could hit back are "qualitative measures", a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

According to Reuters, there has still been some critical coverage of the U.S.as the two nations exchange massive tariffs, but the criticism has largely not been directed at Trump the individual.

The move drew immediate condemnation from Senate Finance Chairman Orrin Hatch, a Republican from Utah, who called it "reckless" and not "targeted".

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