Published: Wed, July 11, 2018
Global | By Marsha Munoz

China: Tit-for-tat tariffs will ‘destroy’ US-China trade


Washington has chose to slap additional tariffs on 200 billion dollars worth of Chinese imports, as trade tensions escalate between China and the United States.

"With the announcement from the U.S on the Chinese tariffs, the reaction on the policy side from China will be the key event to watch in the coming days", said Shinichiro Kadota, senior FX strategist for Barclays in Tokyo. It's unclear what that action could include.

Stocks fell and metals prices slumped on Wednesday as USA threats of tariffs on an additional $200 billion worth of Chinese goods pushed the world's two biggest economies closer to a full-scale trade war.

Head of USA equity strategy at JP Morgan, Dubravko Lakos-Bujas, said: "Despite trade headlines, S&P 500 companies should deliver robust earnings on above-trend revenue growth and sharply higher margins".

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The additional tariffs could affect as much as $468bn in trade between the two countries, with the possibility of an ever more expansive levies that US President Donald Trump threatened to impose on China.

Mr Lighthizer said the products targeted by the tariffs are those that benefit from China's industrial policy and forced technology transfer. Beijing has retaliated with duties on the same value of United States imports, ranging from soybeans to cars, and has vowed to respond proportionally to any new U.S. tariffs.

China formally responded to the latest United States move on Wednesday, with a Chinese Ministry of Commerce spokesperson calling it "unacceptable".

US Senate Finance Committe chairman Orrin Hatch labelled the move as "reckless", while the US retail industry leaders assocation immediately condemned the move, saying the "the President has broken his promise".

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"For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition", US Trade Representative Robert Lighthizer said in announcing the proposed tariffs.

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

"Despite the serious economic consequences of ever-increasing tariffs, today there are no serious trade discussions occurring between the US and China, no plans for trade negotiations anytime soon, and seemingly little action toward a solution", Brady said.

The USTR will accept public comments on the latest round of tariffs and hold hearings August 20-23 before reaching a decision after August 31, according to a senior US official who briefed reporters on condition of anonymity.

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The latest escalation in the trade dispute sent markets lower.

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