Published: Mon, July 09, 2018
Finance | By Loren Pratt

Trump tariffs on China take effect as trade war escalates

Trump tariffs on China take effect as trade war escalates

China's Foreign Ministry said on July 6 that it has already begun implementing tariffs on US goods in response to the 25 per cent USA tariffs. The company blamed it on the trade dispute between the USA and China, saying the tariffs will result in "fewer than expected SUV sales and higher than expected costs".

Under the snippy headline " So much trade losing", the lead editorial compared the Trump trade war to the start of Civil War that led to nothing but tragedy for the rebels of the South.

When Donald Trump became US President he promised to "Make America Great Again".

The ministry called the U.S. actions "a violation of world trade rules" and said that it had "initiated the largest-scale trade war in economic history".

"I think products made in China are the best", said one shopper in a Beijing grocery story, who gave his name as Yang.

On the streets of Beijing, there were some concerns that prices would rise due to the tariffs but also a determination to support the Beijing authorities in the trade war.

"There are no winners in a trade war", the chamber's chairman, William Zarit, said in a statement.

USA stocks were little changed and the dollar extended losses in early trading in NY.

But the massive scale of Trump's suggested new USA tariffs - 10 times the initial $50 billion - would blow any such modest predictions out of the water. Asian equities wobbled but also managed to end up. But it was also explicitly about containing China's influence, and preventing Beijing from writing the "rules of the road" on intellectual property, labor and environmental standards.

Ma Jun, a member of the monetary policy committee of the People's Bank of China, told Chinese media that the trade war is estimated to push down China's gross domestic product by 0.2 percentage point against a backdrop of a downturn in exports. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

With its enormous currency reserves, China holds some $1.2 trillion in United States treasury bonds and officials have reportedly started to slow or halt their purchases.

Canada hit back by imposing tariffs on more than 100 USA products, from ketchup to toilet paper, insecticide and washing machines.

The first ever United States tariffs aimed just at China will likely rally Trump's voters who agree with his "America First" argument that Beijing hasn't played fair for years, stealing America's intellectual property and undercutting its manufacturers.

Trump's decision to trigger a trade war isn't confined to the tit-for-tat exchange with China.

Mr Trump said: "You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. OK?"

Previously, the White House had limited tariffs to an additional $200 billion of imports from China.

The escalation from the threat of a trade war to reality is something farmers were dreading.

"In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China", the state-run China Daily newspaper said in an English language editorial on Friday.

The Trade Partnership, a US-based economics research firm, suggests that the impact will be worse than initially expected, with around 400,000 jobs affected.

While Friday's tariffs will likely hit consumers eventually, Trump's threat to impose tariffs on another $200 billion worth of Chinese exports to the USA would likely result in more direct pain for consumers.

He did not specify the amount or types of the United States goods that will be taxed by China.

"This is not economic Armageddon".

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