China retaliates against US tariffs, escalates trade war

Apr 05, 2018, 01:22
China retaliates against US tariffs, escalates trade war

The Dow Jones Industrial Average lost 700 points Monday and was poised to open sharply lower today.

China said it would levy 25 per cent tariffs on imports of 106 USA products including soybeans, automobiles, chemicals and aircraft, in response to proposed American duties on its high-tech goods.

The tariffs wouldn't kick in right away.

He said the company expects the impact to be manageable as the US accounts for just over 10 percent of its sales, and production capacity at its Mexican factory can be increased without huge additional costs.

The question now is if Trump will move ahead with the tariffs as announced or change course, potentially going to the table.

The Alliance for American Manufacturing - a coalition made up of US steel manufacturers and the steelworkers union - was more encouraging.

U.S. lobbies working for the country's farmers have also appealed to the Trump administration to refrain from imposing the tariffs for they fear China would do the same, hurting the interest of the United States farmers since the Asian power is one the largest buyers of their crops.

Some U.S. lawmakers have warned that Trump's actions targeting China and other countries in recent weeks could spark a global trade war.

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"What we're talking about on both sides is a fraction of 1 percent of both economies", Ross said.

Trump signed a memorandum on March 22 that could impose tariffs on Chinese imports and restrictions on Chinese investment in the US. It's part of the process. There are carrots and sticks in life... Cutting deficit requires efforts from both the sides.

The tariff list from the office of US Trade Representative Robert Lighthizer followed China's imposition of tariffs on $3 billion worth of US fruits, nuts, pork and wine to protest new US steel and aluminium tariffs imposed last month by Trump. Those include using access to China's vast market as leverage to induce foreign automakers and other companies to help create or improve industry and technology.

US President Donald Trump denied on Wednesday speculation about a trade war between Beijing and Washington.

The Chinese moves came after the United States said Tuesday it would slap 25 percent tariffs on around $50 billion worth of products from China, 1,300 in all, in retaliation for what it sees as unfair Chinese trade practices, including intellectual property and technology theft.

China, the world's biggest steel exporter, calls the tariffs "a serious attack" on worldwide trade and says it will take "firm action" if Chinese businesses suffer losses as a result.

The dispute has fueled fears it might set back the global recovery if other governments are prompted to raise their own import barriers.

The United States exported $15 billion of aircraft to China in 2016, ranking the sector equally with agricultural products like soybeans, according USA trade data.

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William Zarit, chairman of the American Chamber of Commerce in China, says Beijing's potential retaliation in an escalating dispute with Washington is a concern for every US company doing business in China.

These large, global USA companies do a lot of business in China and overseas, which makes their sales and profits vulnerable if the two countries can't work out a deal before the threatened tariffs, which are still under review, go into effect.

The Chinese government's decision saw shares decline in global stock markets.

The US duties will likely provoke a strong response from China, said Carlos Gutierrez, US commerce secretary under former President George W. Bush.

Chinese policies "coerce American companies into transferring their technology" to Chinese enterprises, said a statement by the U.S. Trade Representative.

"In attempting to block China's rise the Trump administration has launched an attack not only on China but on USA companies, workers and farmers".

China's Made in China 2025 plan was announced in 2015, and highlighted 10 sectors for support on the way to China becoming an advanced manufacturing power, from information technology, to robotics and aerospace.

The move comes after the Trump administration yesterday published a list of about 1,300 Chinese exports that could be targeted for tariffs.

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The administration sought to draw up the list of targeted Chinese goods in a way that might limit the impact of the tariffs - a tax on imports - on American consumers while hitting Chinese imports that benefit from Beijing's sharp-elbowed tech policies. That excludes high-end Boeing Co. jetliners such as the 747 and 777, leaving Beijing high-profile targets for possible future conflicts.

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