China accused the United States of bullying and warned it
would hit back after the Trump administration raised the stakes in their trade
dispute, threatening 10 percent tariffs on $200 billion of Chinese goods in a
move that rattled global markets.
China’s commerce ministry said on Wednesday it was
“shocked” and would complain to the World Trade Organisation, but did not
immediately say how Beijing would retaliate in the dispute between the world’s
two biggest economies. In a statement, it called the U.S. actions “completely
The Chinese foreign ministry said Washington’s threats were
“typical bullying” and described the dispute as a “fight between unilateralism
U.S. officials on Tuesday issued a list of thousands of
Chinese goods to be hit with the new tariffs. The top items by value were
furniture at $29 billion of imports in 2017, network routers worth $23 billion
last year and computer components to the value of $20 billion.
The list is subject to a two-month public comment period.
Some U.S. business groups and lawmakers from President
Donald Trump’s own Republican Party who support free trade were critical of the
escalating tariffs. The Republican-controlled Senate voted 88-11 in favour of a
non-binding resolution calling for Congress to have a role in implementing such
Republican U.S. Senate Finance Committee Chairman Orrin
Hatch said the U.S. announcement “appears reckless and is not a targeted
approach.” Republican U.S. House of Representatives Speaker Paul Ryan accused
China of unfair trade practices but added, “I don’t think tariffs are the right
way to go.”
The U.S. Chamber of Commerce has supported Trump’s domestic
tax cuts and efforts to reduce regulation of businesses, but does not back
Trump’s aggressive tariff policies.
“Tariffs are taxes, plain and simple. Imposing taxes on
another $200 billion worth of products will raise the costs of every day goods
for American families,” a Chamber spokeswoman said.
Among the potential ways Beijing could hit back are
“qualitative measures,” a threat that U.S. businesses in China fear could mean
anything from stepped-up inspections to delays in investment approvals and even
HOLDING UP LICENSES
The Wall Street Journal, citing unnamed Chinese officials,
said Beijing was considering holding up licenses for U.S. companies, delaying
approvals of mergers involving U.S. firms and stepping up border inspections of
China could also limit visits to the United States by
Chinese tourists, a business that state media said is worth $115 billion, or
shed some of its U.S. Treasury holdings, Iris Pang, Greater China economist at
ING in Hong Kong, wrote in a note.
Investors fear an escalating Sino-American trade war could
hit global growth and damage sentiment.
The $200 billion far exceeds the total value of goods China
imports from the United States, which means Beijing may need to think of
creative ways to respond to such U.S. measures.
It also highlights how dependent U.S. businesses and
consumers are on Chinese goods. In Trump’s first round of tariffs, China
accounted for 20 percent of total U.S. imports, meaning that substitutes were
readily available. In this round, China accounted for more than half of the
There was a price to be paid by American companies as
government policies legislated winners and losers.
Home furnishing retailers are expected to be hit
particularly hard because China supplies 65 percent of U.S. furniture imports,
according to analysts at Goldman Sachs.
The prospect of a 10 percent tariff on Chinese furniture
imports sent shares of online home store WayFair Inc (W.N) down
2.9 percent, while shares of Restoration Hardware (RH.N)
tumbled 4.3 percent.
Auto parts retailers, which would also be affected by the
latest tariff threats the U.S. lobbed at China, fell more steeply than the
broader market. Shares of Advance Auto Parts Inc (AAP.N)
were down 1.1 percent, Autozone Inc (AZO.N)
fell 1.6 percent and O’Reilly Automotive Inc (ORLY.O)
dropped 1.6 percent.
The Dow Jones Industrial Average .DJI closed
down 0.88 percent, the S&P 500 .SPX was
down 0.71 percent and the Nasdaq was off 0.55 percent.
The MSCI's broadest index of Asia-Pacific shares outside
Japan .MIAPJ0000PUS fell 1.1 percent, while the main indexes in Hong Kong .HSI and
Shanghai .SSEC recovered
somewhat after falling more than 2 percent.
Trump has been following through on pledges he made during
his 2016 presidential campaign to get tough on China, which he accuses of
unfair trade practices including theft of intellectual property and forced
technology transfer that have led to a $375 billion U.S. trade deficit with
The U.S. president has said he may ultimately impose
tariffs on more than $500 billion worth of Chinese goods, roughly the total
amount of U.S. imports from China last year.
U.S. financial analysts said Trump appeared to believe
there was a political benefit to waging a trade war, although that could change
quickly amid economic fallout.
“It is now much more likely that the dispute will continue
for a prolonged period of time and that we will see ratcheting up of
protectionist measures,” said Elena Duggar, an associate managing director at
Moody’s, the credit rating agency.
here for the original article from Reuters.