USA hits China with $34B round of tariffs; Beijing strikes back

USA hits China with $34B round of tariffs; Beijing strikes back

USA hits China with $34B round of tariffs; Beijing strikes back

USA tariffs against Chinese imports took effect early Friday and President Donald Trump made clear Thursday that he is prepared to sharply escalate a trade war between the world's two biggest economies.

Trump on Friday slapped tariffs on $34 billion in Chinese imports, and Beijing fired back by taxing an equal amount of USA products.

Lu provided no details, but the Chinese Communist Party-run People's Daily said the Chinese General Administration of Customs was carrying out a plan announced last month to impose 25 percent tariffs on a US$34 billion list of United States goods, including soybeans, pork and electric cars.

Second, China is trying to leverage its purported victimhood to isolate the United States - and rally Trump's other trade-war victims into a new anti-American alliance.

Mr. Trump has for years slammed, what he describes as, Beijing's underhand economic treatment of the U.S. But the risk is that a spiraling conflict undermines economic growth by gumming up worldwide supply chains and inflicting higher prices on companies and consumers. And while it's not how they would do business, they believe he will get the job done.

Given the moves were widely telegraphed, investors took them in stride.

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The imposition of the tariffs had little impact on Asian stock markets.

The escalation from the threat of a trade war to reality is something farmers were dreading.

Noting the launching of Trump's tariffs with the U.S. USA hiring topped forecasts in June, while the unemployment rate rose from an 18-year low and wage gains unexpectedly slowed.

It accused the US of bullying and said the move would jeopardize global supply chains and hinder the pace of global economic recovery.

China said it would respond with measures of a "corresponding number and quality" if the U.S. produced a list of products that could be hit. Once the trade war starts eroding Trump's economic gains, he and the GOP will lose the political traction they need to remain in control of Congress. "There is no obvious end to this".

The extent of the economic damage will depend on how far both sides go. In other words, the USA and China are likely to impose penal tariffs on their entire imports from each other.

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The U.S. decision to pursue a trade war has eroded the confidence of importers, and could cause a mess in the global supply chain, said Li Yong from China Association of International Trade. Trump has already imposed duties on foreign steel and aluminum imports, drawing a response from the European Union and Canada which fret he may go after automakers next. There are unlikely to be any winners in a trade war.

The U.S. runs a bilateral trade deficit of $336 billion with China and imports much more from it than the reverse, giving it an early advantage. China really has been stealing many of America's most valuable ideas. Whoever can take the pain better will not be the one to blink first. For instance, the tariff on pure-electric vehicles, such as Tesla, will rise to 40 percent of the value from the current 15 percent. Abandoning NAFTA, though, would disrupt the complex supply chains that manufacturers have built across the bloc's borders and likely drive up USA auto prices. That study also found US soybean production could decline by 15 percent.

The US trade deficit in goods with China now stands at about $375bn.

Many economists have voiced concerns that the U.S.

Trump won North Dakota with 63 percent of the vote in 2016. In the White House in 2018, he has started to make good on that pledge. The pact eliminated most trade barriers among the three countries. American officials worry Chinese plans to create tech champions in fields including robotics, biotech and artificial intelligence will erode US industrial leadership.

The strength and size of both economies means the fight could rage on for years. By choosing to fire his tariff cannons against nearly every other major economy including India, he has ensured China's many trading misdeeds will be obscured by the fog of economic war.

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For the time being, analysts say it's hard to see Washington or Beijing backing down in the dispute. "China has an ability to ride out this kind of pressure, to weather the storm, that a lot of countries didn't have in the past".

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