China vows to fight back as the trade war escalates

Cheryl Sanders
July 12, 2018

The United States is preparing 10 per cent tariffs on more than 6,000 Chinese products, from air conditioning units and antiques to toilet paper and truffles.

The Aussie, considered a liquid proxy for China-related trades, fell 0.5 percent against the dollar to US$0.7418.

The Trump administration announced Tuesday that it has started the process of implementing fresh tariffs on $200 billion worth of imported Chinese goods. That came four days after Washington added 25 per cent duties on US$34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports.

A senior administration official told Fox News that China has been "non-responsive" to USA actions and has insisted that Beijing does not see any way America has been hurt by Chinese policies.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Trump said in June. They warned tariffs on imports raise consumer prices and expose USA farmers and manufacturers to retaliation.


China's Commerce Ministry has vowed to retaliate to the countermove.

"The President has broken his promise to bring 'maximum pain on China, minimum pain on consumers, ' and American families are the ones being punished", Hun Quach, RILA VP of worldwide trade, said in a statement.

"Tonight's announcement appears reckless and is not a targeted approach", Senate Finance Chairman Orrin Hatch, a Utah Republican, said in a statement. The official added that China has warned the US that future actions would be met with "economic attacks" on American markets.

"This new round of proposed tariffs takes the fight onto yet another level from which it is going to be hard for either side to make a graceful retreat", said Eswar Prasad, former head of the International Monteary Fund's China division.

"It is impractical for China to match tariffs by quantity", said Frances Cheung, head of Asia macro strategy at Westpac in Singapore.


The list is subject to a two-month public comment period before taking effect.

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent.

The United States is already working on a second wave of tariffs on Chinese goods worth $16 billion.

By Mark Burton and Lucca de PaoliThe U.S. election of Donald Trump lit a fire under metals markets in 2016 as investors took a liking to his pro-business agenda.

The foreign ministry described Washington's threats as "typical bullying" and said China needed to counter-attack to protect its interests. "In the absence of such discussions, the USA and China seem set for a more full-blown trade war, with major economic implications for themselves and the global economy".


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