Published: Mon, August 06, 2018
Markets | By Josh Butler

China to hit back at USA with 60 billion dollars tariffs

China to hit back at USA with 60 billion dollars tariffs

Speaking just hours after China unveiled the countermeasures on Friday, Larry Kudlow, Trump's chief economic adviser, said the USA president was willing to follow through with his threats, in a stark warning to Beijing. National Economic Council Director Larry Kudlow said in a Bloomberg Television interview Friday.

"Because the US side has repeatedly escalated the tension, disregarding the interests of enterprises and consumers of both sides, China has to take necessary countermeasures to defend the country's dignity and the interests of the Chinese people, defend free trade and the multilateral system, and defend the common interests of all countries in the world", the ministry said. Last year, China imported about $130 billion of USA goods.

This outlook was reflected in the statement issued by White House spokeswoman Lindsay Walters who said that "instead of retaliating, China should address the longstanding concerns about its trading practices".

"China's countermeasures with differentiated tariff rates are rational and restrained, and were proposed after extensively soliciting opinions and careful evaluation". European soybean imports from the USA were likely to increase naturally. "China market has dropped 27% in 4months [sic], and they are talking to us". A 25% tariff would boost the cost of a range of US imports at a time when inflation has begun to pick up.

While soybean exports continued to rise in July - as Chinese importers rushed to buy ahead of the retaliatory tariffs Beijing imposed in July - US shipments of automobiles, aircraft and pharmaceuticals fell.

It was the latest in a series of tariffs, with the first being imposed by Trump back in early February. The move was meant to bring China back to the negotiating table for talks over USA demands for structural changes to the Chinese economy and a cut in the bilateral trade deficit.

The result is that both China and the United States are now using government funds to stimulate areas of the economy.

The ministry said timing of the implementation of the new tariffs on United States goods would depend on the actions of the US.

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China's decision to threaten $60 billion of USA goods marks the first time this year that Beijing has not tried to match Washington's tariffs dollar for dollar.

Most major US crops were already hit by previously announced Chinese duties, so the fresh duties announced Friday on about $60 billion worth of American goods is leaving the farm largely unscathed. China continues to move forward while for USA farmers, the trade war has represented a major step backwards.

Meanwhile, Chinese state TV said: "The White House's extreme pressure and blackmail are already clear to the worldwide community".

China urges the United States to relax its controls over exports to China, and protect and promote the high-tech trade and cooperation between companies from both countries, the ministry said.

China immediately expanded its own list of types of US products to be tariffed, including farm products, cars and crude oil.

President Donald Trump has made the reduction of the United States trade deficit one of the key measures of success in his trade fights with China, the European Union, and Canada.

China is trying to seek an "equal" position in future talks with the US with Friday's retaliation announcement, said Gai Xinzhe, analyst at the Bank of China's Institute of International Finance in Beijing. The deficit had narrowed in previous months as companies rushed out exports to beat the imposition of tariffs.

Unlike China, where trade negotiations are now frozen and no discussions are underway, both Europe and Mexico in recent weeks have been signalling they are amenable to a quick deal with Trump if he will settle for relatively minor concessions.

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