US ramps up trade row with China, threatens new tariffs

Lester Mason
July 11, 2018

The U-S president has long criticized China for what he calls unfair trade practices. China promised to lodge complaints at the World Trade Organization but didn't detail what its retaliatory measures would be.

China's imports of USA goods are so small that Beijing "cannot match fresh US tariffs", said Vishnu Varathan of Mizuho Bank in a report.

The Retail Industry Leaders Association (RILA) was quick to condemn the proposal, saying it will punish American consumers.

The first USA tariff list focused on Chinese industrial products to help cushion the impact on American consumers. Rather than address our legitimate concerns, China has begun to retaliate against US products. The moves followed an initial raft of 25 percent tariffs announced Friday by the US on $34 billion in Chinese exports, which was reciprocated by China.

The U.S. Trade Representative is taking comments on these proposed tariffs until August 17.

Beijing has said it would hit back against Washington's escalating tariff measures, including through "qualitative measures", a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

High-level talks between the world's two largest economies starting in May failed to deliver a breakthrough to head off a trade war.

But China also faces difficulties in retaliating directly: it ships far more goods to the United States ($506 billion a year ago, according to USA figures) than come back in the opposite direction ($130 billion).

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said. The move has faced criticism from American officials and lawmakers.

In Beijing, Li Chenggang, assistant minister at China's Commerce Ministry, said at a forum in Beijing that the latest United States proposals interfered with the globalisation of the world economy and that China's support for a multilateral trade system would not change. Both governments have raised tariffs on $34 billion worth of each other's goods and already said they are considering additional charges on another $16 billion.

"Concerns over trade and trade wars are really having an adverse effect, less so on the USA markets than the global markets, but it is certainly taking a bite".

The dramatic move by Trump sent a shockwave through Asian markets last night, with the Shanghai Composite index dropping 2.1 per cent and the CSI300 index of major Shanghai and Shenzhen stocks tumbling 2 per cent.

Head of U.S. equity strategy at JP Morgan, Dubravko Lakos-Bujas, said: "Despite trade headlines, S&P 500 companies should deliver robust earnings on above-trend revenue growth and sharply higher margins". "Consumers, businesses and the American jobs dependent on trade, are left in the crosshairs of an escalating global trade war".

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Trump said in June.

Other reports by Iphone Fresh

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