Get ready for the 'largest trade war in economic history'

07 July, 2018, 01:21 | Author: Eric Barnett
  • Trade Wars: Trump loads first volley against China

Although the Chinese statement did not outline targets, Beijing has promised to slap levies on an equal amount of American goods, including heartland staples like soybeans, corn, pork and poultry - a move President Donald Trump said would compel the hit China with levies on up to $500 billion in products.

The first round targets Chinese industrial goods, not consumer products, in an attempt to limit the impact on US households, but companies that rely on Chinese-made machinery or components may eventually have to pass along increased costs to customers.

China's commerce ministry, in a statement shortly after the U.S. deadline passed at 04:01 GMT on Friday, said that it was forced to retaliate, meaning imported United States goods including cars, soybeans, and lobsters also faced 25 per cent tariffs.

"Sentiment is holding up well in Asia today, reflecting that tariffs on $34 billion of goods is pretty much priced in", said Frances Cheung, head of Asia macro strategy at Westpac in Singapore. The implementation of new US duties on these products will impact companies from outside China, including the U.S.

A statement from the Chinese Commerce Ministry denounced USA actions as "a violation of world trade rules" and warned that the current dispute between both countries was launching the "biggest trade war in history".

The Commerce Ministry said Trump "ignited the biggest trade war in economic history".

It also is rooted in the clash between American notions of free trade and Beijing's state-led development model.

Beijing has announced changes this year including easing limits on foreign ownership in insurance and some other fields. 34 and then you have another 16 in two weeks, and then, as you know, we have 200 billion in abeyance, and then after the 200 billion we have 300 billion in abeyance. "So we have 50 plus 200 plus nearly 300", Trump told reporters aboard Air Force One.

US companies had US$256 billion in investment in China by the end of previous year, exceeding China's US$140 billion in the United States, according to a report by the National Committee of US-China Relations and Rhodium Group in April.

Chinese officials reject accusations of theft and say no foreign company is obligated to share technology.

The U.S. -China trade war could have global implications.

"This is a potential concern for the outlook of corporate investment and consumption around world", Hui said. It accused the United States of "typical trade bullying".

And enduring the pinch isn't going to pay off. Protectionism has historically proven to be destructive for the global economy and won't achieve what the Trump administration is trying to accomplish, said Hsu.

Cheng Dawei, a professor of worldwide trade at Renmin University in Beijing says these industries are still in their early stages and need inputs from global supply chains.

American tariffs on steel and aluminium imports have provoked retaliatory measures against billions of dollars of American exports.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

Al Jazeera's McBride said that the looming trade war has not played well "to the general business sentiment".

U.S. Customs and Border Protection said in a notice it would begin collecting the 25 percent duties on 818 product lines identified in June by the U.S. Trade Representative's Office. "At that point, the U.S. will be more interested in negotiations, and the Chinese side will also want to come to the table".


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