Chinese state media calls for 'people's war' as USA trade conflict escalates

Cheryl Sanders
May 14, 2019

Investors already rattled by mounting tensions between Beijing and Washington got an extra jolt when China announced late Monday that it was raising tariffs on $60 billion of imports from the United States in retaliation for the Trump administration's latest hike in import taxes on Chinese exports.

Paris and Frankfurt both lost more than one percent, while London suffered more modest declines.

China imports nearly four times less than it exports to the United States, and Beijing already levies punitive charges on nearly all U.S. goods arriving in China - $110 billion out of an annual total of $120 billion.

China's rates will target a number of American imports with tariffs rising to as high as 25 percent, according to a statement by the Tariff Policy Commission of the State Council - China's cabinet.

"China will not only act as a kung fu master in response to United States tricks, but also as an experienced boxer and can deliver a deadly punch at the end", Wei said.

As was the case on Monday, trade headlines and movements in Chinese financial markets, especially the yuan, will continue to dictate how the Aussie dollar will fare during Tuesday's trading session.

The retaliation measure came three days after the U.S. moved to increase tariffs on US$200 billion worth of Chinese goods from 10% to 25% as of May 10.

The Dow Jones Industrial Average rose 59.04 points, or 0.23%, at the open to 25,384.03.

In addition to tariff hikes, China could also use other measures to hit back at the United States, as it imports fewer USA products - which limits its ability to match tariffs dollar-for-dollar. The Trump administration had to issue $12 billion in aid to farmers after China's tariffs took their toll.

"Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically".

For months, as American and Chinese officials faced off at the negotiating table, China's media downplayed the trade tensions.

The latest trade talks ended Friday with no word of progress after Washington accused Beijing of trying to backtrack on earlier commitments. "Both sides will pay", he told Fox News.

The move comes after Beijing threatened "necessary countermeasures" for Trump's tariffs on Friday.

These measures "will get a lot of support in China, but will further undermine business confidence" overseas, said Jake Parker from the US-China Business Council.

It imposed 10 per cent charges on $60 billion of imports but left other goods unaffected, possibly out of concern for Chinese companies that depend on US technology and components.

Uber's share price has fallen another 8.5% amid wider stock market turmoil, as the trade war between the U.S. and China escalates. And now, Trump is promising new relief ahead China's incoming tariffs.

Ingraham noted that the Chinese government "retaliated" against Trump's 25 percent increase on tariffs on some Chinese goods by threatening to hike tariffs on 5,000 USA products. The VIX, however, is still far below the elevated levels it reached at the end of a year ago when the S&P 500 came extremely close to entering a bear market, meaning a decline of 20% or more from a recent peak.

Since then, the sides have exchanged several rounds of trade duties.

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