Published: Сб, Июля 07, 2018
Business | By Kate Woods

US, China fire first shots in ‘largest trade war in economic history’

US, China fire first shots in ‘largest trade war in economic history’

The American tariffs are the result of Mr Trump's attempt to protect U.S. jobs and stop what he calls "unfair transfers of American technology and intellectual property to China".

Beijing insists it's the injured party.

"China is forced to strike back to safeguard core national interests and the interests of its people", the country's Commerce Ministry said in a statement after the tariffs kicked in.

The official China Daily newspaper accused the Trump administration of "behaving like a gang of hoodlums".

In contrast, China imports only about $125 billion worth of goods from the US.

But the tit-for-tat measures have escalated the trade dispute between the world's two largest economies and the world's commodities markets are increasingly embroiled in the bust-up. Americans worry that rising Chinese technological prowess might erode US industrial leadership and prosperity.

China's exports to the USA grew 5.4 per cent in the first half, 13.9 percentage points lower than for the same period past year, according to the General Administration of Customs. That conjures the image of this being a cool, calm, collected game of chess on both sides: Washington and Beijing.

A 25% tariff is now being applied to $US34 billion worth of Chinese goods entering the United States, an amount China's government has previously promised to match on USA imports. Beijing said it had no choice but to respond in kind, but was yet to outline the full extent of any retaliatory measures.

And Gao noted that of the $34 billion in taxable products on the U.S. list, about $20 billion - or almost two thirds - are made by firms with foreign investment, including a "significant portion" from America.

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China's customs agency said Chinese tariffs on USA goods would take effect immediately after the U.S. duties on Chinese goods kicked in, although Beijing has said it will not be the first to pull the trigger. "So we have 50 plus 200 plus nearly 300".

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports.

That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States past year.

Replacing American shipments with coal from other places would not be hard for China, but a loss of business with the world's top importer of the fuel would hurt companies in West Virginia, a state that heavily favoured Trump in the 2016 presidential election.

China though has indicated that even if it has the lighter hand in imposing reciprocal punitive tariffs, it will not be bullied into buying American goods it does not need. The tariffs were going to target products used for robotics, information technology, communication technology and aerospace, Trump said.

"Whether it's through trade war or other means, the end goal is to make China subservient to the United States, " said He Weiwen, vice president of the Center for China and Globalization, in Beijing. "Half of all US manufacturing jobs depend on exports, (and) one in three acres on American farms is planted for global sales". Trump has added to the tension by threatening new tariffs on cars.

Ironically, Cohen says the victims of Chinese IP or intellectual property theft won't benefit from the tariffs. The damage could also spread to other economies, hurting business confidence and prompting companies to delay investments.

"We can probably say that the trade war has officially started", said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University's Antai Colege of Economics and Management. "At that point, the USA will be more interested in negotiations, and the Chinese side will also want to come to the table".

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