Trump may impose more tariffs on China

Trump may impose more tariffs on China

Trump may impose more tariffs on China

The Chinese government's industrial strategy to make its goods competitive on the global market, in place since 2015, seems to have been one of the key instigators of Trump's trade war.

Trump has said continuously that China has taken advantage of the U.S. economy, and he has vowed to hit almost all the country's products with tariffs, as much as $450bn.

China accused President Trump last week of starting "the biggest trade war in economic history" with his administration's original round of tariffs. By listing potential tariffs on goods including refrigerators, cotton, and steel and aluminum products, the Trump administration is going after China's electronics, textiles, metal products and auto parts industries.

More than 6,000 items could be affected - including burglar alarms, auto tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products. It stems from Washington's belief that Beijing steals or pressures companies to hand over technology and worries that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership. Rather than address our legitimate concerns, China has begun to retaliate against US products. That came four days after Washington added 25 percent duties on $34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports. China imported USA goods worth $130 billion previous year and Friday's tariff hike hit $34 billion of that, with another $16 billion cited for a possible increase.

Farmer Terry Davidson walks through his soy fields July 6, 2018, in Harvard, Illinois, the same day China imposed retaliatory tariffs aimed at the United States soybean market.

The Commerce Ministry on Wednesday gave no details, but Beijing responded to last week's U.S. tariff hike on $34 billion of imports from China by increasing its own duties on the same amount of American goods.

But China also faces difficulties in retaliating directly: it ships far more goods to the United States ($506 billion a year ago, according to U.S. figures) than come back in the opposite direction ($130 billion). Both governments have raised tariffs on US$34 billion worth of each other's goods and already said they are considering additional charges on another US$16 billion.

He also said China should be ready for the outbreak of a full-blown trade war, warning that a deal would only be reached after several rounds of trade sanctions and negotiations. "We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy".

A larger concern for the Trump administration could be the trade feud's impact on consumers. Until January 2017, Ivanka's products were made in factories based in China and Hong Kong; around the time of Trump's inauguration, they appeared to make a well-timed exit and moved to other foreign factories, such as those in Indonesia, Vietnam, and South Korea.

It also said that China would have to respond to the United States actions.

Investors were wary of China response to the latest US tariff threat, as the country's assistant commerce minister said the proposed USA duties harm the World Trade Organization system and globalisation.

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

She said the downside risk to growth mainly stemmed from trade tensions.

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