Published: Thu, July 12, 2018
Global | By Marsha Munoz

China vows retaliation for latest USA tariff threat

China vows retaliation for latest USA tariff threat

China on Wednesday said that it would strike back against the USA after the Trump administration announced it would impose another 10 percent tariff on $200 billion worth of Chinese exports.

US Trade Representative Robert Lighthizer writes that these new tariffs come as a response to how Beijing retaliated to the initial tariffs - quickly implementing matching tariffs on the same amount of US exports to China. It's unclear what that action could include.

The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such US measures.

The Trump administration is readying tariffs on another $US200 billion of Chinese imports - ranging from burglar alarms to mackerel - escalating a trade war between the world's two biggest economies.

The new list published on Tuesday targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms and increasing the stakes for lawmakers in Trump's Republican party facing elections in November.

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Beijing gave no details of the possible retaliation but earlier it threatened "comprehensive measures".

China imports far less from the United States than the USA imports from China.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further. This has raised concerns that China could retaliate with non-tariff trade measures.

On Wednesday, the MSCI's broadest index of Asia-Pacific shares outside Japan was down about 1 percent, while the main indexes in Hong Kong and Shanghai recovered somewhat after falling more than 2 percent.

The United States is playing a risky game as China is one of the United States' most important trading partners, with about $630 billion (-$130 deficit) in trade done in 2017, not far behind Canada ($670 billion, +$8 billion surplus) and just ahead of Mexico ($616 billion, -$64 billion deficit).

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In Beijing, Li Chenggang, assistant minister at China's Commerce Ministry, said that the latest U.S. proposals would hurt both countries and pointed to declines in Chinese export growth and overseas investment to the United States in the first half of this year. "Tariffs threaten to boomerang on the very workers they're supposed to help, and will only further undermine the confidence manufacturers need to make investments in new equipment, facilities and people".

Trump has been receiving support for regulation of US businesses as well as domestic tax cuts from the US Chamber of Commerce but soon after Tuesday's announcement a Chamber spokeswoman states, "Tariffs are taxes, plain and simple".

'Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families, ' trade lawyer Scott Lincicome said.

China slammed the USA threat to expand tariff hikes to imports including apples, fish sticks and French doors as a "totally unacceptable" escalation of their trade battle on Wednesday and vowed to protect its "core interests".

Chinese tactics, the administration said, include outright cybertheft and forcing US companies to hand over technology in exchange for access to the Chinese market. During a visit to Germany this week by Chinese Premier Li Keqiang, the countries signed business deals worth more than $23 billion. "If we see an increase in shipments from the latter in the coming months, we will be able to say there has been a shift in the supply chain, rather than simply a change in reporting techniques", he said.

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