Published: Mon, July 09, 2018
Global | By Enrique Rogers

China trade war breaks out as tariffs kick in

China trade war breaks out as tariffs kick in

President Donald Trump says he has tariffs on hundreds of billions of dollars in more Chinese goods ready in his pocket - if it comes to that - while China says the US has launched the biggest trade war in history.

Washington-based think tank the Peterson Institute for International Economics (PIIE) expects USA tariffs on Chinese goods, which it says particularly target computers and electronics, to hurt multinationals more than China as well as other firms in Asia.

Beijing's taxes hit US -made aircraft, cars, computer chips, fuel, pork and soybeans.

In trade disputes between Japan and the United States during the 1980s and 1990s, Tokyo was targeted by the same so-called Section 301 investigation that Washington is now using against China to determine what it says are forced technology transfers to Beijing that burden or restrict US commerce.

"China promised to not fire the first shot, but to defend national core interests and the interests of the people it has no choice but to strike back as necessary", the Commerce Ministry said in a statement.

In particular, the United States "will impose a 25% tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the "Made in China 2025" program", the statement said.

U.S. president Donald Trump also warned that he might ultimately target over $500 billion worth of Chinese goods, including apparel products, based on China's reaction on U.S. decision on duty imposition.

The paper holds that the tariffs will affect several US sectors, including technology (which Trump says he's trying to protect) while hitting multinational supply chains and firms, as well as harming foreign investment in Chinese firms by allies such as Japan, South Korea, and European Union countries. "The countdown is on as to what Trump will do next".

This prompted Beijing to respond with levies on U.S. imports.

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The spectre of a full-blown trade war also risks sinking China's markets deeper into bear territory. "So we have 50 plus 200 plus nearly 300", he said.

China accused the U.S. of launching the "largest trade war in economic history", saying it was "typical trade bullying" that could trigger "global market turmoil".

China has sought the moral high ground during the increasingly bitter build up to the trade war by positioning itself as a champion of free trade but state media has now ramped up the rhetoric against the US President. A long list of targeted Chinese products directly purchased by Americans such as TVs, printers and washing machines was sharply revised in June following a trade hearing.

Tomoo Marukawa, professor at the Institute of Social Science of the University of Tokyo, said the United States' goal of reducing trade deficits by tariff measures, especially by imposing tariffs on Chinese goods, will by and large fail. The 28-nation European Union political bloc is the U.S.'s biggest trading partner, representing more than $1.1 trillion in goods and services in 2016, according to the Office of the United States Trade Representative.

Chinese officials reject accusations of theft and say no foreign company is obligated to share technology.

Beijing is also taking a hard-line stance, vowing never to surrender to Washington as far as the trade issue is concerned.

USA relations with other major trading partners have also been fraught following the Trump administration's decision earlier this year to slap tariffs on imported steel and aluminum, including those metals from the European Union, Mexico and Canada.

Mexico is also studying how to reduce the economic strain of an escalating trade spat, an action that China has also adopted. The move prompted China to retaliate the same way.

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