Published: Mon, July 09, 2018
Markets | By Otis Pena

USA invokes new tariffs on China, launching full-fledged trade war

USA invokes new tariffs on China, launching full-fledged trade war

At the stroke of midnight Washington time, the US pulled the trigger on 25% duties on $34 billion in Chinese machinery, electronics and hi-tech equipment, including autos, computer hard drives and LEDs.

Beijing's commerce ministry, in a statement shortly after the United States deadline passed on Friday, said the world's No. 2 economy was forced to retaliate by placing jacked-up 25 percent tariffs on U.S. cars, soybeans and lobsters.

For years, the Chinese government turned a blind eye to counterfeited USA luxury goods, bootlegged Hollywood films, fake Apple stores, trade secrets pilfered from cutting-edge US tech companies.

Beijing insists it's the injured party.

"We are forced to make a necessary counterattack to protect the core profits of the country and the interests of people", it said in expressing readiness to take reciprocal measures against the United States.

It accused the United States of "typical trade bullying".

That would bring the total of targeted Chinese goods to potentially $550bn - more than the $506bn in goods that China shipped to the United States previous year.

The tariffs would mark a significant escalation in the trade dispute between the world's two biggest economies.

Alas, the tariffs going into effect Friday will probably punish us and our allies more than they'll hurt China.

Friday's tariffs could just be the opening skirmishes in the war, as Trump has vowed to hit as much as $450 billion in Chinese goods, the vast majority of imports. It said they would damage the global economy unless other countries stop them.

"There should be no doubting Beijing's resolve", the China Daily said.

Tropical Storm Chris to bring showers
Sunday, the remnants of Beryl were located near latitude 15.8 North, longitude 62.4 West, N.H.C. said. Tropical storm force winds were extending outward up to 70 miles, the center said.

The president upped the stakes on Thursday, saying the amount of goods subject to tariffs could rise to more than $500bn.

"Then you have another 16 [billion] in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK?"

"We just want what we had before", he said. Some economists question the accuracy of the official figures, yet the US Census Bureau shows America bought $376bn more of Chinese goods than the total value of all US goods sold in the Asian country past year.

The US Chamber of Commerce says some states will have billions of dollars worth of exports at risk.

Washington increased tariffs at 12:01am Eastern time (4:01 GMT) on $34bn worth of Chinese imports, a first step in what could become an accelerating series of tariffs.

President Donald Trump said more than $500 billion in Chinese products could ultimately be penalized.

The root of the problem for Trump with Canada and Mexico stems from the North American Free Trade Agreement (Nafta), signed in 1994, which the president has called a "disaster" and "one of the worst deals anybody in history has ever entered into". U.S. tariffs on steel and aluminum imports have provoked retaliatory measures against billions of dollars of American exports.

The president's tariffs, the PIIE's researchers conclude, are "a prime example of 20th century tools aimed at the knowledge-embodying trade flows of the 21st century".

For the time being, analysts say it's hard to see Washington or Beijing backing down in the dispute.

They are the first stage in levies threatened by the Trump administration on a total of $450 billion worth of Chinese goods.

In a note on the China-US trade war, ING chief economist Rob Carnell said that while this is not "economic Armageddon", it is "applying the brakes to a global economy that has less durable momentum than appears to be the case". On the other hand, it is expanding restrictions on investments.

Like this: