Trump threatens China with more than $500bn in United States trade tariffs

Marsha Scott
July 6, 2018

Beijing vowed to retaliate Friday with higher tariffs on $34 billion worth of us goods.

"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.

Trump's protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.

The big question is how far the hostilities between Washington and Beijing will go.

Washington imposed 25 per cent duties on $34 billion of imports from China in the first in a possible series of increases that President Donald Trump says could affect up to $550 billion of Chinese goods.

Economists have for months warned of the potential damage to the U.S. and global economies from aggressive trade policies and protectionism, which would raise prices and upend global supply chains.

But Trump has said his administration will respond to retaliation from Beijing with much bigger waves of tariffs, raising the prospect of worsening tit-for-tat reprisals.

The General Administration of Customs did not comment on the delays and said the agency will implement the tariffs as announced on Thursday. "So we have 50 plus 200 plus nearly 300", Trump told reporters aboard Air Force One on Thursday.

The Chinese government said that it was "forced to counterattack" against USA punitive tariffs on its imports, which went into effect early on Friday.

He threatened a 10 percent levy on an additional $US200b of Chinese goods if Beijng "refuses to change its practices".

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China has threatened to respond with tariffs on hundreds of US goods, including top exports such as soybeans, sorghum and cotton, threatening USA farmers in states that backed Trump in the 2016 USA election, such as Texas and Iowa.

China has said it would not "fire the first shot", but the Chinese General Administration of Customs yesterday made it clear that Chinese tariffs on USA goods would take effect immediately after U.S. duties on Chinese goods kick in.

"For soybean producers like me this is a direct financial hit", Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade.

"The United States will be opening fire on the whole world and also opening fire on itself", Chinese Commerce Ministry spokesman Gao Feng told reporters on Thursday.

A 25% tariff is now being applied to $US34 billion worth of Chinese goods entering the United States.

"In the past 40 years, the development of China's society and economy has encountered many difficulties and problems, but as long as we uphold the leadership of the Communist Party and reform and opening up, we can surmount all challenges", Guo said in a statement. Given the 12-hour time difference, that would have put its implementation ahead of Washington's.

China has vowed to fight back to protect its economy. China is the top export market for USA soybeans, accounting for almost $14bn in sales and representing nearly a third of total U.S. soybean production in 2017, according to the American Soybean Association.

"China has already made preparations", Lu told a daily news briefing.

From Air Force One, on his way to a rally in Montana, Trump said the United States is ready to target an additional US$200 billion in Chinese imports - and then US$300 billion more - if Beijing refuses to yield to U.S. demands and continues to retaliate.

The two giant economies appear ready to see which side can endure the most pain. US stocks edged higher on Thursday, however, amid hopes that American trade tensions with Europe may ease after comments from German Chancellor Angela Merkel. "We urge the two governments to come back to the negotiation table". For example, the United States government wants China to rein in government subsidies for policies like "Made in China 2025", which seeks to pump hundreds of billions of dollars into industries such as robotics, electric cars and computer chips with the aim of becoming a global leader. It's very hard to see how China's leadership is going to give up on this five year plan.

Other reports by MaliBehiribAe

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