Published: Fri, July 06, 2018
Global News | By Blake Casey

China delays retaliatory tariffs, won't fire 'first shot' in potential trade war

China delays retaliatory tariffs, won't fire 'first shot' in potential trade war

With the United States slapping a 25 per cent tax on $US34 billion worth of Chinese imports starting Friday, China was set to hit back with taxes on an equal amount of USA products, including soybeans, lobsters, sport-utility vehicles and whiskey.

Trump has threatened to impose new taxes on up to $416 billion worth of goods in coming months if China doesn't meet his trade demands.

Trump and his advisers argue the tariffs are necessary to pressure China into abandoning unfair practices such as stealing intellectual property and forcing American companies to hand over valuable technology.

Chinese officials on Thursday said they were prepared to respond with tariffs on $34 billion worth of American goods, raising serious concerns among industry leaders in the USA agricultural, manufacturing and technology sectors and increasing the odds of billions more in import taxes for both countries in the coming months. USA tariffs on steel and aluminum imports have provoked retaliatory measures against billions of dollars of American exports. Right now, the European Union adds a 10% tax on imported United States cars, and the U.S. puts 2.5% on EU vehicle imports, and is threatening to ramp that up to 25%.

"More than 70,000 jobs depend on the Port of Oakland".

Several southern states, many of which also backed Trump in the election, also risk being hit.

In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government's top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.

The figures come as stock market traders, farmers, and whiskey makers watch anxiously as the issue comes down to the wire.

Escalating tariffs would likely raise prices for consumers, inflate costs for companies that rely on imported parts, rattle financial markets, cause some lay-offs and slow business investment as executives wait to see whether the Trump administration can reach a truce with Beijing. The motorcycle maker said this month it may move production out of the avoid European Union tariffs on its bikes.

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Chinese leaders fail to see how damaging their tactics appear to Western governments, said Scott Kennedy of the Center for Strategic and International Studies in Washington. Although polls suggest Trump faces hard mid-term elections in November, a fight to replace a U.S. Supreme Court justice may prompt his political base to overlook slightly higher monthly bills.

Even before the first shots were fired, the prospect of a trade war was worrying investors. "I think it is better to do it now that five or 10 years from now", said Stephen Moore, an economist at the conservative Heritage Foundation who is close to the president.

"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. USA and Chinese companies will now find it costlier to trade with each other, meaning less demand and higher prices.

Together, the two rounds - $34 billion and $16 billion - would comprise the $50 billion in tariffs that Trump announced in May, citing China's alleged theft of intellectual property, forced technology transfer and other industrial policies that favor China's domestic businesses and hurt USA firms. Trump has added to the tension by threatening new tariffs on cars.

"The US has breached WTO trade rules and launched the largest trade war in economic history to date", the ministry's statement read.

It's also possible that Europe could become ensnared in the U.S. They are undoubtedly reluctant to do much more in response to Mr. Trump's tariffs than impose reciprocal measures of their own, as long as there is any hope of negotiating a settlement.

Some prominent Chinese experts say Beijing may have miscalculated the pain the US tariffs could inflict on export manufacturers' already razor-thin margins, and overplayed its hand.

In 1900, tariffs accounted for about 30% of the total value of U.S. imports, as the country was trying to restrict imports and develop its young industrial sector.

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