Published: Thu, July 12, 2018
Global News | By Blake Casey

U.S. trade war fears weigh on markets as South Korea sounds alarm

U.S. trade war fears weigh on markets as South Korea sounds alarm

The proposed US duties on US$200 billion worth of Chinese imports could take effect after public consultations end on Aug 30, according to a statement from the US Trade Representative's office on Tuesday (July 10). They warned tariffs on imports raise consumer prices and expose U.S. farmers and manufacturers to retaliation.

The tech sector, more broadly, will suffer from tariffs due to the nature and complexity of the worldwide supply chain that it relies on.

US President Donald Trump has accused China of unfair trade practices that give its firms an advantage, while hobbling American companies and creating an outsized trade deficit for the United States.

A survey by the American Chamber of Commerce in Shanghai found that most US businesses operating in China oppose the use of tariffs in retaliation for the challenges they face, from an uneven playing field to poor protection of intellectual property rights.

The US on Tuesday published a list of $200 billion (€170 billion) worth of Chinese goods that could soon be hit with tariffs.

U.S. officials released a list of thousands of Chinese imports the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum.

Trump had threatened earlier that he would impose additional tariffs if Beijing retaliated with countermeasures. "There is no justification for such action", he said in a statement.

Last year, China only imported about $130 billion of US goods, so to retaliate it might increase the size of the tariffs it imposes or resort to what it calls "qualitative" measures, which USA businesses fear could mean reprisals against their China operations. While this initial move focused more on Chinese industrial products, the follow-up promises to instead affect ordinary consumers.

"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition", Lighthizer said.

The eventual goal is to impose tariffs on 40 percent of Chinese imports, the same proportion of U.S. goods hit by Beijing's retaliation, an official told reporters.

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China on Thursday said foreign firms operating in China would suffer in a trade war, urging USA companies to lobby their government to protect their interests, and said no talks to end the impasse were now under way.

China could also limit visits to the United States by Chinese tourists, a business state media said is worth $115 billion, or shed some of its U.S. Treasury holdings, Iris Pang, Greater China economist at ING in Hong Kong, wrote in a note.

The latest round of import taxes on Chinese goods has a two month public commentary period and the United States administration is being open about the fact that they expect China to discuss the move leading one to wonder if it will actually be imposed.

On Wednesday, China's main stock index lost 1.8 per cent and Japan's market benchmark fell 1.1 percent.

Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump's Republican Party, said the announcement "appears reckless and is not a targeted approach".

China slammed the USA threat to expand tariff hikes to imports including apples, fish sticks and French doors as a "totally unacceptable" escalation of their trade battle on Wednesday and vowed to protect its "core interests".

"But more tariffs like these will punish America's manufacturing workers - and could undermine our hard-won gains thanks to tax and regulatory reform".

The latest round of proposed tariffs come a few days after the US government unveiled procedures for companies to apply for exclusions from the first round of tariffs, which went into effect July 6.

South Korea's government has weighed in this morning, warning that its exports could be hurt by the escalating dispute between Washington and Beijing.

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