US levies tariffs on China
The world’s two biggest economies have fired the opening shots in a trade war that could have wide-ranging consequences for consumers, workers, companies, investors and political leaders.
With the United States slapping a 25 percent tax on $34 billion worth of Chinese imports starting today, China was set to hit back with taxes on an equal amount of U.S. products, including soybeans, lobsters, sport-utility vehicles and whiskey.
The United States accuses China of using predatory tactics in a push to supplant U.S. technological dominance. The tactics include forcing American companies to hand over technology in exchange for access to the Chinese market, as well as outright cyber-theft. Trump’s tariffs are meant to pressure Beijing to reform its trade policies.
President Donald Trump made clear Thursday U.S. tariffs against Chinese imports would take effect early today and he was prepared to sharply escalate a trade war between the world’s two biggest economies.
The administration was set to start imposing tariffs at 12:01 a.m. Eastern time today on $34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs. China has promised a swift retaliatory strike on an equal amount of U.S. goods.
Trump discussed the trade war Thursday with journalists who flew with him to Montana for a campaign rally. The president said U.S. tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.
After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional $200 billion in Chinese imports – then $300 billion more – if Beijing refuses to yield to U.S. demands and continues to retaliate.
That would bring the total of targeted Chinese goods to potentially $550 billion – more than the $506 billion in goods that China actually shipped to the United States last year.
Earlier in the day, China said it’s girded for a trade war with the U.S. and can give as good as it gets. But behind the official bravado lies a deep unease over trade friction with Washington.
The Commerce Ministry spokesman, Gao Feng, said Thursday in a new conference Beijing will wait to see what Washington does before taking action of its own.
“China will not bow in the face of threats and blackmail,” he said, adding if Washington acts, China will “fight back to defend the core interests of the country and the interests of the people.”
Yu Zhi, an economist in Shanghai, has urged Beijing to “fully estimate the negative impact of the trade war on the Chinese economy” and find ways to avoid it.
The trade dispute has roiled the stock market, where the benchmark Shanghai Composite index has tumbled 12 percent in the past two weeks.
European leaders hadresponded, with German Chancellor Angela Merkel saying she’d be willing to back cuts on tariffs on U.S. cars imported to the European Union as part of a reciprocal agreement to resolve a trade spat with Washington.
Merkel told reporters in Berlin on Thursday such a deal would need to be offered to other countries that export cars to the EU, too, if it is to conform with World Trade Organization rules.
Bank of England Governor Mark Carney warned central banks shouldn’t be relied upon to prop up the global economy in the event of an all-out trade war.
Carney compared the uncertainty on trade to the bank’s effort to bolster the U.K. economy ahead of Britain’s departure from the European Union.
He told a summit in northern England on Thursday that “in a general trade war, it is unlikely that global financial conditions would prove as robust, or that monetary policy could be as supportive.”
He also offered a swipe at American rhetoric on trade, saying “talk and tweets” was already taking a toll, with signs on uncertain trading was dampening activity.
Some surveys of global export orders and manufacturing output have fallen back from earlier this year.