China vows retaliation for latest $200bn U.S. tariff threat

China vows retaliation for latest $200bn U.S. tariff threat

China vows retaliation for latest $200bn U.S. tariff threat

- The Chinese government vowed Wednesday to take "firm and forceful measures" against USA threats to expand tariff hikes to thousands of products like fish sticks, apples and French doors as their trade dispute escalates.

Here's why that could prove a soft spot in the White House's trade strategy: American multinationals have far more extensive operations in China, both in terms of sales and employees, than Chinese companies have in the U.S. There is "considerable scope for China to retaliate by penalizing these firms, for example via much more stringent regulatory checks or consumer boycotts", according to Capital Economics.

China has seven weeks to make a deal or dig in and try to outlast the US leader. In a statement, it called the USA actions "completely unacceptable". Only about 1% of the items on the list were consumer goods.

Beijing's lopsided trade balance with the United States means it will quickly run out of imports for retaliation.

China bought US$130 billion of United States goods past year.

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About 6.0 billion shares changed hands on US exchanges. Until January 2017, Ivanka's products were made in factories based in China and Hong Kong; around the time of Trump's inauguration, they appeared to make a well-timed exit and moved to other foreign factories, such as those in Indonesia, Vietnam, and South Korea. This makes China the tenth-largest destination for US coal exports.

The U.S. imposed an initial round of 25% tariffs, applying to $34 billion in imports, as part of a $50 billion tariff plan. President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States.

Yet matching the latest US barrage would force China to either levy much higher tariffs or take more disruptive steps like cancelling purchase orders, encouraging consumer boycotts and putting up regulatory hurdles.

Chinese officials are expected to retaliate in other ways, hitting us firms in China with unplanned inspections, delays in approving financial transactions and other administrative headaches.

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The initial USA tariff list focused on Chinese industrial products in an attempt to limit the impact on American consumers. "And the retaliation that will follow will destroy thousands of and hurt farmers, local businesses and entire communities".

Investors said trade war worries may slip to the background as investors begin to focus more closely on second-quarter earnings over the coming weeks.

Even more tariffs could be on the way. Tariffs could stifle hundreds of billions of dollars' worth of projects - including new pipeline infrastructure needed to get oil and natural gas from the prolific Permian Basin to markets. Analysts said domestic concerns would also weigh on shares.

"It's already clear that this well-intentioned policy will actually make the United States less competitive, undermine this administration's vision of energy dominance and the manufacturing renaissance, and nearly certainly destroy many more jobs than it protects".

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