ibusinesslines.com November 16, 2018

China vows retaliation for latest US tariff threat

12 July 2018, 03:27 | Kelvin Horton

China vows retaliation for latest US tariff threat

Beijing described the latest US move as “totally unacceptable” bullying and urged other countries to join China to protect free trade and multilateralism. — Reuters pic

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.

Between the uncertainty that the US-China trade war poses and the prospect for the Federal Reserve to raise rates twice more this year, it would appear that near-term fundamental drivers for the US Dollar are a wash, leaving the greenback's outlook stuck in "neutral" for the time being.

Last week, Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of USA exports to China.

Reacting to the "totally unacceptable" decision by Washington, China's Ministry of Commerce in Beijing made it clear the world's second-largest economy would be forced to take "countermeasures".

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

In a statement, U.S. Trade Representative Robert Lighthizer said that the new 10-percent tariffs were in response to what he called China's "retaliation and failure to change its practices".

With US-China trade tensions continuing to rise, nearly every major asset has tumbled - including the Australian dollar, gold, oil, base metals and global stocks. They criticize Trump's tactics but share U.S. complaints about Beijing's industrial policies.

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

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.

There is a two-month period of public comment on the latest proposed list before the tariffs get imposed.

Global investors have mostly looked past the intensifying trade fight between the USA and China, even as the countries move to deploy tariffs on hundreds of billions of dollars in goods.

"Sometimes our friends, when it comes to trade, are treating us worse than the enemies", Trump said at a press conference on June 29. They are meant to put pressure on China to stop stealing USA companies' trade secrets and forcing them to hand over intellectual property to Chinese firms as a condition of doing business there.

Some U.S. business groups and lawmakers from Trump's own Republican Party were critical of the escalating tariffs. That would leave China only US$80 billion for further retaliation.

Further, reporters were told specifically, "Don't attack Trump's vulgarity; don't make this a war of insults".

The International Monetary Fund has warned that a full-blown trade war could undermine the broadest global upswing in years. They warned tariffs on imports raise consumer prices and expose USA farmers and manufacturers to retaliation.

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