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Trump’s trade war begins, and China hits back - sort of

07 July 2018

Gao said China's foreign trade was expected to continue on a stable path in the second half of the year, though investors fear a full-blown Sino-American trade war would deal a blow to Chinese exports and its economy.

China's officials have previously said they would respond by imposing higher levies on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.

"China is forced to strike back to safeguard core national interests and the interests of its people", the country's Commerce Ministry said in a statement after USA tariffs kicked in just after midnight ET, which is noon in Beijing.

While Trump touts announcements of jobs created in steel plants due to the tariffs, manufacturing industries warn many more jobs will be lost in companies producing autos, auto parts, appliances and other goods that depend on imported components.

The Commerce Ministry statement didn't provide details on its retaliation.

In the run-up to Friday, there was no sign of renewed negotiations between United States and Chinese officials, business sources in Washington and Beijing said.

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. "Phenomenal growth", said Zampa, "There's concern now if there are retaliatory tariffs coming from China on wine, nuts, fruit and meats the business for our growers is going to diminish".

The rapid tit-for-tat follows weeks of anxious anticipation over the "trade remedies" President Trump vowed last month to implement. The first phase of that will affect $34 billion worth of goods. He told reporters aboard Air Force One on Thursday, "You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. Ok?" Trump said. "So we have 50 plus 200 plus nearly 300".

That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States past year.

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The tariffs will hurt the American high-tech companies that Trump is trying to protect from intellectual property theft as it becomes increasingly hard for those companies to do business in China, she said.

A Chinese ministry spokesman said the "US is shooting itself in the foot and hurting the world" with its tariff hikes.

China's tariffs on hundreds of United States goods include top exports such as soybeans and cotton.

Underpinning the dispute about technology is Trump's anger at America's $375 billion deficit in goods trade with China.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement. Requests for comment went unanswered at the U.S. Treasury, USTR and the U.S. Commerce Department.

An analysis of over four dozen imported U.S products facing higher duties showed that prices were little changed on Friday afternoon versus earlier in the week.

Global stock markets managed small gains Friday, overcoming earlier wobbles prompted by China and the United States firing opening salvos in a trade war that pits the world's two biggest economies against each other. "But it is applying the brakes to a global economy that has less durable momentum than appears to be the case", Rob Carnell, chief economist at ING, said in a note to clients.

The start of the trade war likely confirms the widening rupture between Trump and his own Republican Party, a traditional champion of free trade and big business whose members, while critical, have so-far shrunk from curtailing the White House's trade powers.

Trump’s trade war begins, and China hits back - sort of