China to retaliate to $US50b Trump tariffs

Andrew Cummings
June 16, 2018

China previously issued a list of US products it would hit with tariffs in the event of a trade war, from big products like soya beans and beef to more niche items such as bourbon and ginseng.

Washington has also completed a second list of possible tariffs on another US$100 billion of Chinese goods, in the expectation that China will respond to the initial United States tariff list in kind, sources said.

The first set of tariffs will total $34 billion and take effect July 6, with another $16 billion still to be reviewed, the U.S. Trade Representative said. The tariffs are part of the USA response to China's policies and practices that require foreign companies to hand over trade secrets involving technology, intellectual property and innovation, the United States government said.

"It generally focuses on products from industrial sectors that contribute to or benefit from the "Made in China 2025" industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles", USTR announced in a statement Friday.

"We have the great brain power in Silicon Valley, and China - and others - steal those secrets", Trump said in an interview with Fox News.

"Imposing tariffs places the cost of China's unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers, and ranchers", said Thomas Donohue, president of the U.S. Chamber of Commerce.

"We grow more than we can use [domestically]", said Blue Earth County corn and soybean farmer Kevin Paap, president of the Minnesota Farm Bureau.

Trump went on to threaten China with more penalties, should the country decide to retaliate. Beijing has drawn up a list of $50 billion in USA products that would face retaliatory tariffs.

Earlier on Friday, China vowed to do just that, saying it would strike back, just hours before Trump's statement. The Dow fell almost 200 points on Friday after the tariffs were announced.

"Today's USA action is generally market negative because investors likely see the United States imposing tariffs as increasing somewhat the risk of a full-on trade war, as we do", wrote Evercore ISI analyst Terry Haines in a Friday note.

The EU, along with Canada and Mexico, will impose retaliatory tariffs on US goods, and file dispute settlement cases with the World Trade Organization in Geneva.

This morning the U.S. Trade Representative included a list of another 1,102 products, which includes solar cell and module imports under 8541.40.60. (ZTCOY.PK) In April, the US banned ZTE from buying American technology for seven years, effectively putting the company out of business.

"'There is no trade war". "We will immediately introduce tax measures of equal scale and equal strength, and all economic and trade achievements reached by the two sides will be invalidated".

"A very interesting reading of the geopolitical status of play suggests that after Trump befriended North Korea in Singapore, China lost an important leverage factor". Soybeans are China's biggest import from the United States by value.

China is adept at playing countries and companies off against one another, Jennifer Hillman, a Georgetown University law professor, testified last week before the U.S. The Communist Party-run government countered with a list of goods slated for tariffs, including cars and farm products, that could cause political damage for Republicans. "China has, for example, always been engaging in several unfair practices related to the acquisition of American intellectual property and technology".

Meanwhile, Rep. Dave Reichert, R-Wash., said he disagreed with the action because "Americans will bear the brunt instead of China".

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