China counterpunches against U.S. in growing trade war

08 July 2018, 12:27 | Isaac Mcdaniel

China won't give in to"blackmail on trade vows the commerce ministry More

China won't give in to

The world's two largest economies, the United States and China, are locked in a worsening trade battle that could have unexpected side effects on the global economy.

A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods - $34 billion plus a planned follow-on list worth $16 billion - will cut China's economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency said today.

"In order to defend the core interests of the country and the interests of the people, we are forced to retaliate", the Ministry of Commerce said in a statement.

A China central bank adviser said the planned United States import tariffs on $50 billion worth of Chinese goods - $34 billion plus a planned follow-on list worth $16 billion - will cut China's economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency reported Friday.

The U.S. and China on Friday launched tit-for-tat tariffs on each other's imports, the opening shots in what Beijing called "the largest trade war in economic history".

Beijing said it would be "forced to make a necessary counterattack" after United States tariffs on $34bn of Chinese goods came into effect.

China's government also announced it was adding this round of U.S. tariffs to an existing complaint filed with the WTO in April shortly after Washington unveiled the threat to punish Beijing for its policies on intellectual property.

While the world focuses on China tariffs, officials at the US Commerce Department are said to be referring to this week as "retaliation week", as responses from targets of the Trump administration's trade policy take effect.

The two countries have engaged increasingly in verbal sparring in recent months, but Friday's pair of haymakers has dramatically escalated the trade dispute - and that has investors across the world worries about what comes next. Prices are about to go up on numerous import items, which will make clear that tariffs are actually - ta da! - taxes on domestic consumers rather than on foreign exporters.

US crude stood 0.2 percent higher at $73.09 a barrel.

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Previously, the White House had limited tariffs to an additional $200 billion of imports from China.

Of the $34 billion of Chinese goods targeted by the U.S., around 59%, or $20 billion, is produced by foreign-owned companies, including some from the U.S., Chinese Commerce Ministry spokesman Gao Feng said Thursday. -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.

There was confusion about exactly what U.S. products would be hit in the initial wave of tariffs as China's Commerce Ministry had not published an updated list.

A trade war could disrupt these flows and even shift the location of the final manufacture, to avoid penal tariffs in the export destination.

The president also takes issue with the size of the USA trade deficit with China.

Oreshkin said that Russian steel and aluminum makers suffered $537.6 million in damages from the new US tariffs. Gregory Daco, head of US economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 percent through 2020.

US Customs and Border Protection officials were due to collect 25% duties on a range of products including cars, computer disk drives, parts of pumps, valves and printers and many other industrial components.

The Trump administration has contended that China has deployed predatory tactics in a push to overtake United States technological dominance, including cybertheft and requiring USA companies to hand over technology in exchange for access to China's market.

"There should be no doubting Beijing's resolve", the newspaper said.



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