Donald Trump announced hefty tariffs on $50 billion of Chinese imports on
Friday as Beijing threatened to respond in kind, in a move that looks set to
ignite a trade war between the world’s two largest economies.
hardline stance on trade has led him to wrangle with allies, said in a
statement that a 25 percent tariff would be imposed on a list of strategically
important imports from China. He also vowed further measures if Beijing struck
States will pursue additional tariffs if China engages in retaliatory measures,
such as imposing new tariffs on United States goods, services, or agricultural
products; raising non-tariff barriers or taking punitive actions against
American exporters or American companies operating in China,” Trump said in a
Friday, China vowed to do just that, saying it would strike back, just hours
before Trump’s statement. Trump has already said the United States would hit
another $100 billion of Chinese imports if Beijing retaliated.
Beijing appeared increasingly headed toward a trade war after several rounds of
negotiations failed to resolve U.S. complaints over Chinese industrial policy,
market access and a $375 billion trade gap.
“If the United
States takes unilateral, protectionist measures, harming China’s interests, we
will quickly react and take necessary steps to resolutely protect our fair,
legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang told a
regular daily news briefing.
and Border Protection will begin collecting tariffs on an initial tranche of
818 product categories valued at $34 billion on July 6, the U.S. Trade
Representative’s office said..
The list was
slimmed down, dropping Chinese flat-panel television sets and other items
typically purchased by consumers, following a public comment period. The list
still includes autos, including those imported by General Motors Co and Volvo,
owned by China’s Geely Automobile Holdings.
But USTR added
a second tranche of tariffs on 284 product lines targeting semiconductors, a
broad range of electronics and chemical products it said benefited from China’s
industrial subsidy programs, including the “Made in China 2025” plan.
these products will go into effect at a later date after a public comment
period. A senior Trump administration official told reporters that companies will
be able to apply for exclusions for Chinese imports they cannot source
said the tariffs were aimed at changing China’s behavior on its technology
transfer policies and massive subsidies to develop high-tech industries. The
United States now dominates those industries, but Chinese government support
has made it difficult for U.S. companies to compete.
declined to comment on China’s recent offer to purchase an additional $70
billion worth of American farm and energy commodities and manufactured goods to
resolve the trade disputes.
completed a second list of possible tariffs on another $100 billion in Chinese
goods, in the expectation that China will respond to the initial U.S. tariff
list in kind, sources told Reuters.
published its own list of threatened tariffs on $50 billion in U.S. goods,
including soybeans, aircraft, and autos, and has said it would hit back if
Washington followed up with further measures.
futures plunged 1.5 percent to a one-year low on concerns that an escalating
trade fight with China will threaten shipments to the biggest buyer of the
oilseed, traders said.
Washington have held three rounds of high-level talks since early May that have
yet to yield a compromise. Trump has been unmoved by a Chinese offer to buy an
additional $70 billion worth of U.S. farm and energy products and other goods,
according to people familiar with the matter.
to come to a consensus or a compromise seems high,” Tai Hui, chief market
strategist for Asia-Pacific at J.P. Morgan Asset Management wrote in a note.
Trump has also
triggered a trade fight with Canada, Mexico and the European Union over steel
and aluminum and has threatened to impose duties on European cars.
about the escalating trade conflict sent shares in Chinese telecoms gear maker
ZTE Corp tumbling on Friday. The company has lost 30 percent of its market
value since resuming trade this week.
ZTE last week
agreed to pay a $1 billion fine to the U.S. government to end a crippling
supplier ban imposed after it broke an agreement to discipline executives who
conspired to evade U.S. sanctions on Iran and North Korea.
‘TRADE TENSIONS WILL BE LONG-LASTING’
The “Made in
China 2025” initiative is aimed at accelerating China’s prowess and narrowing
its competitiveness gap with the United States and other industrial powers in
key technologies such as robotics and semiconductors.
While China has
in recent months made incremental market-opening reforms in industries for
which critics in the foreign business community say they were already planned,
it has not been inclined to yield on its core industrial policies.
trade tensions will be long-lasting,” Yifan Hu, regional chief investment
officer and chief China economist at UBS Wealth Management, told a briefing in
skirmish is not just about the trade deficit and exchange rates, but about the
rules of the game, market openness and intellectual property. It is also about
values, governance and geopolitical disagreements,” she said.
here for the original article from Reuters.