Published: Thu, July 12, 2018
Worldwide | By Myra Stephens

Donald Trump hits China with $200 billion in new tariffs

Donald Trump hits China with $200 billion in new tariffs

The move comes after the United States imposed 25% tariffs on Chinese goods worth $34 billion last Friday.

But the USA action drew a swift reaction from the plastics and petrochemical industries, with the head of the Plastics Industry Association saying the tariffs would "boomerang" and hurt manufacturing.

Chinese tariffs have already taken a toll on US exports such as soybeans, which raises questions about the possible political repercussions President Trump could face from farmers who supported him in the 2016 election.

Financial markets could take a harder fall if China retaliates to the latest volley of US tariffs, as Beijing has vowed, according to research firm Capital Economics.

The president last month asked the U.S. Trade Representative's office to identify US$200 billion of Chinese goods that could be hit with 10 percent tariffs. Tit-for-tat tariffs already are raising the cost of some goods, such as washing machines, while industry groups warn of potential price hikes for cars, electronics and other items.

While China's theft and coercion of intellectual property from foreign companies is a widely acknowledged problem, trade experts are largely skeptical of Mr. Trump's strategy to deal with it through punitive tariffs. High-level talks between the two countries starting in May failed to deliver a breakthrough to head off a trade war.

Global investors have mostly looked past the intensifying trade fight between the US and China, even as the countries move to deploy tariffs on hundreds of billions of dollars in goods. China has repeatedly denied accusations by the Trump administration of unfair trade policies.

The list of products facing tariffs is long and varied - everything from vacuum cleaners and TV components to bricks, tires and badger hair shaving brushes (!) (I'll pull together a longer list ASAP).

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.

"There is still a good six or seven weeks before these (tariffs) take effect so it is not like we are going to see these tomorrow, but it is definitely the next step in a trade war", TD Securities global strategist James Rossiter said.

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

Stocks fell sharply Wednesday as concerns over escalating trade tensions threatened to erase the week's gains.

Experts have said that the outlook of the trade war depends on how China responds to the tariffs on its imports. "It is imperative that we maintain the robust market we have worked so hard for decades to establish with China".

Washington chose to impose the extra tariffs after efforts to negotiate a solution to the dispute failed to reach an agreement, senior administration officials said on Tuesday.

A senior administration official told Fox News that China has been "non-responsive" to USA actions and has insisted that Beijing does not see any way America has been hurt by Chinese policies.

The dramatic move by Trump sent a shockwave through Asian markets last night, with the Shanghai Composite index dropping 2.1 per cent and the CSI300 index of major Shanghai and Shenzhen stocks tumbling 2 per cent.

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