China: Tit-for-tat tariffs will ‘destroy’ US-China trade

Lester Mason
July 13, 2018

The latest decision comes on top of the imposition of a 25 percent tariff on $34 billion of Chinese exports last Friday, with a further $16 billion expected to be hit by the same levy within weeks.

Smaller exporters will be hit particularly hard by the tariffs, according to Cao Yishan, a credit research analyst at PIMCO Asia Ltd.in Hong Kong, as they can't pass on the costs through price rises or by shifting production elsewhere like their bigger counterparts can.

The statement issued by Lighthizer was that of an imperial overlord whose word is law, to be obeyed without question, with any opposition to be met by escalating reprisals.

"That $200 billion worth of goods subject to tariffs represents less than 1 percent of [gross domestic product], and the 10 percent tariff on those goods less than a tenth of percent", Atkinson says.

Head of USA 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".

President Donald Trump has therefore ordered the trade department to "begin the process of imposing tariffs of 10% on an additional $200 billion of Chinese imports", Mr. Lighthizer said in a statement. "China has not changed its behavior - behaviour that puts the future of the U.S. economy at risk". That raises the risk China could retaliate in other ways, such as placing restrictions on us companies doing business in the country. The US has suggested that it may ultimately impose tariffs on $500 billion worth of Chinese goods, or roughly the entire amount of US imports from China.

"China seems to have no interest in bending and they will retaliate". "The negative impact of the trade friction has already appeared". "It seriously jeopardizes the global industrial chain, ... hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers".

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

"They go low, we go high", he said, in an apparent jab at Trump as he borrowed a phrase used by former US First Lady Michelle Obama in the 2016 US election campaign.

"When exposing and criticizing American words and actions, be careful not to link it to Trump and instead to aim it at the USA government", a memo based on verbal instructions from government officials reads.

It vowed to immediately file an additional lawsuit against the United States to the World Trade Organization.


Trump and Canadian Prime Minister Justin Trudeau traded barbs over the steel tariffs at a farcical summit of the Group of Seven richest countries last month.

The impact is forecast to be moderate for now, with the median estimate of economists for output growth at 6.5% this year, in line with the goal.

Trump, who has reportedly weighed quitting the 164-member WTO, has voiced particular irritation over the fact that China continues to self-identify as a developing nation. "Regardless, the $200 billion in potential additional tariffs is not a surprise".

And European officials have said Beijing is trying to woo the EU with market access in return for standing with China against Trump's trade measures, though the Europeans, who share United States criticism of China but disapprove of Trump's tariffs, have largely refrained from taking sides.

"If you are Trump, you basically want to go after China only after you make sure that NAFTA is a go". David French, a senior official at the National Retail Federation, told the Financial Times that they could "boomerang back" and hit consumers and workers.

Chinese tactics, the administration said, include outright cybertheft and forcing USA companies to hand over technology in exchange for access to the Chinese market.

Christine McDaniel, a senior research fellow at George Mason University in Virginia, told VOA that while the Trump administration's actions have bipartisan congressional support, its strategy to date of tariffs and investment restrictions could be costly to US manufacturers and consumers.

The lopsided export balance between the two countries acts as a bargaining chip for the USA in when it comes to tariffs.

China hasn't yet clarified how it will respond to the latest salvo.

Business leaders have been warning that if China didn't take real measures to address a lack of reciprocal market openness, it would sow retaliatory sentiment among its largest trading partners.

In what amounted to a rebuttal of Trump, Merkel said: "This shows that China's market opening in these areas isn't just talk, but action". For negotiations to succeed, "no party should point a gun at the other party", he said. Holmes said the tariffs so far haven't reduced demand.

Other reports by Iphone Fresh

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