China trade battle kicks off; markets take it in stride
- Author: Jon Douglas Jul 08, 2018,
Jul 08, 2018, 0:24
China's foreign minister said trade protectionism and unilateral actions were "short-sighted" and in a statement on Friday called on European counties to work with China to safeguard a globally free trade system.
And Chinese authorities quickly retaliated with equivalent tariffs on $34 billion worth of imported US goods - previously promised as ranging from vehicles to soybeans, beef and other agricultural products.
It accused the US of igniting "the biggest trade war in economic history".
And China's foreign ministry said retaliatory tariffs of equal size and scope had taken effect "immediately".
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.
"For example, world-leading semiconductor companies are upset that chips made in the USA and sent to China for assembly or testing will face a high tariff on their total value when they return".
China rejected "threats and blackmail" ahead of a threatened US tariff hike, striking a defiant stance Thursday in a dispute companies worry could flare into a full-blown trade war and chill the global economy.
U.S. tariffs on $34bn (£25.7bn) of Chinese goods have come into effect, signalling the start of a trade war between the world's two largest economies.
As the trade war with China - caused by tariffs demanded by Donald Trump - heats up, the editors of the Wall Street Journal have taken the president to task, sarcastically mocking him as a "master negotiator" who has yet to negotiate any deals while causing damage to the US economy. Part of his plan is to radically change how USA trade deals work and to focus on protecting the domestic economy.
It may be some time before the effect of the tariffs is clear. That study also found USA soybean production could decline by 15 percent.
"So we have 50 plus 200 plus nearly 300", he said.
The U.S. goods trade deficit with China totaled $375.23 billion previous year, almost half the U.S. trade deficit globally, according to U.S. Commerce Department data. -China trade involves parts and supplies, rather than final goods - so the most immediate effect will be felt by the companies making the products, not the consumers finding them on store shelves.
Gao Feng, China's Ministry of Commerce spokesman said Thursday that the US, in hurting the world, is hurting itself, the Times reported.
Why Soybeans Are at the Heart of the U.S.
China retaliated with tariffs on a similar amount of goods.
Chinese shares, which have been battered in the run-up to the tariff deadline, slipped further from early deals and pulled Asian markets down, while the yuan currency also weakened.
While both governments were fighting fiercely, netizens in both China and the United States focused their attention on a cargo ship, Peak Pegasus. USA stocks edged higher on Thursday, however, amid hopes that American trade tensions with Europe may ease after comments from German Chancellor Angela Merkel. The rest of the world would suffer collateral damage, even if the U.S. were to refrain from penalising imports from other countries.
Peak Pegasus, together with numerous other trade companies and businessmen, will become the victims of this trade war.
The Trump administration contends China has deployed predatory tactics in a push to overtake USA technological dominance.
"The global financial crisis, which ensured that we now act in the framework of the G-20, would never have been resolved so quickly, despite the pain, if we hadn't cooperated in a multilateral fashion in the spirit of comradeship", Merkel said on Wednesday.