Published: Tue, June 19, 2018
Markets | By Otis Pena

China labels Trump tariff threat as ‘extreme pressure and blackmailing’

China labels Trump tariff threat as ‘extreme pressure and blackmailing’

Last Friday, the Trump administration announced a 25 percent tariff on up to $50 billion of Chinese products, prompting Beijing to respond with a 25 percent tariff on $34 billion of US goods. After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.

The White House said Monday evening that if China goes through with its promise to retaliate against the U.S. tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods.

The initial US tariffs are aimed at items such as semiconductors, electronics, plastics and other goods from sectors expected to benefit from China's "Made in 2025" initiative to dominate the world in technology areas such as robotics, driverless cars and advanced medical devices.

The US wants China to stop practices that allegedly encourage transfer of intellectual property - design and product ideas - to Chinese companies, such as requirements that foreign firms share ownership with local partners to access the Chinese market.

China vowed to protect its interests, countering any USA tariffs imposed on its goods with a mirror response.

"Donald Trump is once again at the centre of market sentiment, as fears over an impending trade war are heightened yet again", noted Joshua Mahony, market analyst at IG trading group.

The Chinese Commerce Ministry, in a statement translated for POLITICO, blasted the action as an example "of extreme pressure and blackmail" by the Trump administration that flouts worldwide norms for handling trade disputes.

These include major American exports to China such as soybeans, which brought in $14 billion in sales a year ago and are grown in states that supported Trump during the 2016 presidential election.

The move follows China's announcement that it would retaliate in kind to Trump's initial decision to hit $50 billion worth of Chinese goods with a 25 percent tariff.

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I have an excellent relationship with President Xi, and we will continue working together on many issues.

The U.S. imported $505 billion of goods from China past year.

China had offered to ramp up purchases of American goods by only $70 billion to help cut the yawning trade imbalance with the United States, whereas Trump had demanded a $200 billion deficit cut.

"Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong", Trump said.

Still, U.S. companies had $92.5 billion worth of investments in China as of 2016, many of which could face retaliation by Chinese regulators if Beijing is looking for ways to exert pressure on the United States. That means things like tourism and education, industries from which the United States benefits a lot more than China does.

The intellectual property sanctions were the latest in a spate of protectionist measures unveiled by Trump in recent months that included tariffs on steel and aluminum imports to the USA and a tough rhetoric on trade negotiations from North America to Asia.

Yet, while Bardole believes the ever-escalating trade war between America and China is bad for everyone involved-including the USA soybean industry and him personally-he gives the president slack on this issue. "The United States initiated a trade war and violated the laws of the market". Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies.

China had warned it will take "qualitative" and "quantitative" measures if the USA government publishes an additional list of tariffs on its products.

U.S. politics may restrain Trump. A delegation of Trump officials initially reached a preliminary deal with their Chinese counterparts on a preliminary trade deal that would have postponed the United States tariffs in exchange for Chinese purchases of American goods. But it appears that Trump and Kudlow were more interested in Cook's promise that Apple will contribute $350 billion to the US economy over the next five years.

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