Published: Tue, May 14, 2019
Markets | By Otis Pena

Chinese officials announce tariffs on $60B of USA exports

Chinese officials announce tariffs on $60B of USA exports

China today made good on a threat to retaliate against a sharp increase in U.S. import tariffs despite a warning from President Trump not to do so.

China said on Monday that it would increase tariffs of up to 25% on $60 billion (€53 billion) worth of USA goods, starting on June 1.

A commentary in Chinese state-run news agency Xinhua, citing Chinese academics at a think tank over the weekend, said that facing USA tariff hike threats, China has adhered to its bottom line, defended national dignity and people's interests.

China's envoy to the trade talks, Vice Premier Liu He said before leaving Washington that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the USA should be lifted as a condition for striking a deal.

Analysts have warned that failed trade talks and the deterioration in relations will put a dent in the USA and China's economic prospects.

USA -imposed tariffs will put pressure on China to make a deal because they will make Chinese products more expensive for Americans, and Chinese manufacturers will therefore sell less.

The president also hypothesized in an early-morning tweet: "I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win". Economists say more might follow to reduce the risk of American tariff hikes. It also would turn the president's trade wars into a tangible reality for many Americans and their pocketbooks as he seeks re-election. The S&P 500 is still up 12.2 per cent of the year with technology stocks blowing away rest of the market with 18.4 per cent gains. China has the resolution, courage, and confidence to rise to all sorts of challenges, they said. China's modernized and streamlined foreign direct investment law, continued steps to achieve high quality development and domestic innovation along with China's bold move to increase imports to historic levels within the framework of global Belt and Road connectivity have also been key factors behind China's robust economic condition.

And the effects of Trump's trade war were not limited to the American market. And slower USA economic growth could even hurt domestically focused companies.

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"We're in terrific shape in order to correct 20 years plus of unfair trading practices with China", Kudlow said.

Kudlow said there is a "strong possibility" that Trump will meet Chinese President Xi Jinping at a G20 summit in Japan in late June.

The president said on Monday that the administration would offer financial assistance to assist farmers whose products could be impacted as trade tensions worsen.

Lighthizer said a final decision on that has not yet been made but it would come on top of the Friday tariff rate increase to 25% from 10% on $200 billion worth of Chinese imports.

Stocks are plunging at the open on Wall Street Monday after China announced retaliatory tariffs against goods from the United States.

Trump said there "is no reason for the United States consumer to pay the tariffs, which take effect on China today ..."

Economists have warned that the existing tariffs would hurt US growth.

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