Published: Thu, July 12, 2018
Markets | By Noel Gibbs

US ramps up trade row with China, threatens new tariffs

US ramps up trade row with China, threatens new tariffs

China's commerce ministry said it was "shocked" by Washington's latest move, which comes just days after both countries imposed tit-for-tat tariffs on $34 billion of each other's goods, and ups the ante in a heated trade dispute that has rattled global financial markets.

Analysts have warned that spiralling trade tensions between the two powerhouses could have a damaging impact on the global economy and far-reaching consequences across the planet.

The 10% tariffs will not kick in immediately but will undergo a two-month review process, with hearings August 20-23., according to a statement from the U.S. Trade Representative's office Tuesday.

Stocks fell and metals prices slumped to their lowest in a year on Wednesday, as U.S. threats of tariffs on an additional $200 billion worth of Chinese goods pushed the world's two biggest economies ever closer to a full-scale trade war.

President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States.

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Scott Lincicome, a trade lawyer for the group Republicans Fighting Tariffs, said tariffs on $200 billion would amount to a "multibillion-dollar tax on American businesses and families" and prompt China to retaliate against American exporters.

China immediately branded the plan a "totally unacceptable" escalation of their trade battle and vowed to protect its "core interests". Beijing also has filed a complaint in the World Trade Organization against the U.S. actions.

The United States is playing a unsafe game as China is one of the United States' most important trading partners, with about $630 billion (-$130 deficit) in trade done in 2017, not far behind Canada ($670 billion, +$8 billion surplus) and just ahead of Mexico ($616 billion, -$64 billion deficit).

For Qualcomm, an acquisition deal that was reportedly approved by Chinese authorities earlier this year might be in jeopardy, as Bloomberg noted today. Those nations also have retaliated.

The US-China spat is one of several trade fights picked by the protectionist President Donald Trump as his "America First" agenda disrupts trade relations among traditional allies.

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China has fired back against United States threats of punitive tariffs with 25% tariffs on U.S. food and energy exports - such as coal, crude oil, beef, and whiskey.

On the other hand, if the Chinese bought up more Treasuries, they could make the USA dollar even more expensive, and widen the trade deficit further.

As the threats in the trade dispute have increased, so too have signals from Beijing that it means to follow through on reforms.

Thousands of Chinese imports are under threat in the newly suggested tariffs, including hundreds of food products as well as auto tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.

The officials said they tried to target goods that would reduce the harm to US consumers. "It will also result in retaliatory tariffs, further hurting American workers", a Chamber spokeswoman said.

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In a statement, U.S. Trade Representative Robert Lighthizer said that the new 10 percent tariffs were in response to what he called China's "retaliation and failure to change its practices". "Unfortunately, China has not changed its behaviour - behaviour that puts the future of the United States economy at risk".

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