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

14 July 2018

Chinese tariffs have already taken a toll on US exports such as soybeans, which raises questions about the possible political repercussions President Trump could face from farmers who supported him in the 2016 election. The United States complains that China uses predatory practices in a push to challenge American technological dominance.

The Trump administration announced Tuesday it is preparing a new package of tariffs targeting Chinese exports valued around $200 billion, the latest escalation in the trade war with Beijing.

The move came after US President Donald Trump said last week the United States may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of US imports from China past year. "To defend the core interests of the nation and the fundamental interests of the people, the Chinese government will, as always, be forced to take necessary countermeasures", the official said, adding that China will file complaint with the World Trade Organisation. Beijing has vowed to retaliate dollar-for-dollar.

Last year, the United States imported fishing products from China for a total value of USD 2,700 million (tilapia represented USD 426 million and shrimp accounted for USD 335 million) while it exported seafood to the Chinese markets for USD 1,300 million, according to statistics from NOAA.

The proposed tariffs do not go into effect immediately, but will undergo a two-month review process as officials from both countries negotiate settlements to their trade disputes. The U.S. has now listed another 170 bn euros ($200bn) worth of tariffs on more products that are due to go into force in September. "It will also result in retaliatory tariffs, further hurting American workers", a Chamber spokeswoman said.

That "will hit the Chinese export sector hard", said Rajiv Biswas of IHS Markit in a report.

"If China does react with further escalation in tariffs, the USA equity market as well as the dollar-yen or Australian dollar could face further downward pressures", he said.

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China bought $130 billion of US goods past year.

The Chinese commerce ministry has slammed the USA plan to impose tariffs on additional imports worth some $200 billion as totally unacceptable, promising a mirror response to defend its national interests.

"While there is now frighteningly little bilateral discussion taking place, increased domestic opposition in the USA to tariffs would make such talks more likely", wrote Louis Kuijs, head of Asia economics at Oxford Economics, in a research report.

So a move targeting the operations of those companies would allow China to exploit a bargaining chip of it's own. Regulators can deny or cancel licences or launch lengthy tax, environmental or anti-monopoly investigations.

The total US debt is over 18 trillion euros. All other major governments have approved the deal. "The negative impact of the trade friction has already appeared".

The European Union Chamber of Commerce in China said this week its member companies are rearranging the global flow of their goods to make sure any bound for the United States don't pass through China.

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