China says it is 'shocked' by US actions in trade dispute

Andrew Cummings
July 12, 2018

"The behavior of the U.S. is hurting China, hurting the world, and hurting itself", the ministry said in a statement, adding that it was "shocked" by USA actions.

It is the latest shot in a spiralling dispute between the world's two largest economies.

Chinese retaliation: China has threatened to retaliate dollar-for-dollar if the Trump administration imposes a new round of tariffs. The list amounts to $200 billion in products in total and also includes chemicals, steel, aluminum, TV components and many consumer products, including food and clothing.

The tariffs will not be imposed until after a two-month period of public comment on the proposed list, but some U.S. business groups and senior lawmakers were quick to criticize the move.

Oliver Jones from Capital Economics has warned that China's response to Trump's latest tariff threat could hit the U.S. stock market hard.

"The markets still remain sensitive to the trade-related theme, which is something investors have to take into account for the long term", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

"The trade situation is worrisome but nothing more is going to happen right away. We believe the U.S. measures interfere with economic globalisation and damage the world economic order".

An all-out trade war with China could affect a third of all US imports, data from Deutsche Bank Torsten Slok show.

Beijing's commitment to its ongoing deleveraging campaign means that tight credit conditions will continue, Yan said.

"China has no option but to fight fire with fire. So, now he's fighting two wars and that's a bit complicated", Tal said.

In a statement USA trade representative Robert Lighthizer said these new additional tariffs are a result of "China's retaliation and failure to change its practices" after the first round of tariffs. The official added that China has warned the USA that future actions would be met with "economic attacks" on American markets.

China has, in recent years, become a key export market for growing USA energy exports. "There is no justification for such action".

President Trump escalated his trade war with China Tuesday, identifying an additional $200 billion in Chinese products that he intends to hit with import tariffs. China's yuan meanwhile dropped 0.45 per cent against the dollar to move back towards an 11-month low plumbed last week.

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said.

Some U.S. business groups and lawmakers from Trump's own Republican Party were critical of the escalating tariffs.

'Given China's likelihood of retaliation, it's also billions worth of new tariffs on American exporters'.

Soybeans, crushed to make cooking oil and the protein-rich animal feed ingredient soymeal, were the biggest US agriculture export to China past year at a value of US$12.3 billion, according to the US Department of Agriculture.

"American families are the ones being punished". "This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies".

The market slide may have been contained in part by speculation the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.

The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years.

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