ibusinesslines.com September 21, 2018

Canada 'caught in the crossfire' of US-China trade dispute

13 July 2018, 01:57 | Erica Roy

US to impose tariffs on $200 billion Chinese imports

US prepares to impose new tariffs on additional $200B worth of Chinese goods

On July 10, U.S. Trade Representative Robert Lighthizer announced in a statement that U.S. President Donald Trump has "ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports".

China slammed the latest U.S. tariff threat as a "totally unacceptable" escalation of their trade battle and vowed Wednesday to protect its "core interests". In a statement, it called the US actions "completely unacceptable". "In order to safeguard the core interests of the country and the fundamental interests of the people, the Chinese government will, as always, have to make the necessary counter-measures".

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 USA measures.

The news sent markets skidding in Asia as Chinese stocks tumbled and the yuan weakened.

The trade war between the world's top two economies has landed at the World Trade Organization today, as the United States demanded a "reckoning" over China's membership in the body.

China says it will respond to the new tariffs that President Trump has asked his administration to prepare.

The Australian dollar, often seen as a proxy for Chinese economic fortunes, fell 0.6 per cent as did South Korea's won and Mexico s peso, which also faces the threat of Trump ditching the NAFTA trade pact.

"China has since retaliated against the United States by imposing tariffs on Dollars 34 billion in US exports to China, and threatening tariffs on another Dollars 16 billion". They have given no indication when they might meet again.

Trump has been following through on pledges he made during his presidential campaign to get tough on China, which he accuses of unfair trade practices including theft of intellectual property and forced technology transfer that have led to a $375 billion US trade deficit with China.

China said it is "shocked" after the USA announced plans for fresh tariffs, escalating a trade war between the two countries.

Asked what Beijing would do, foreign ministry spokeswoman Hua Chunying gave no details but said: "We will take firm and forceful measures".

Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay.

It stems from Washington's complaint that Beijing steals or pressures companies to hand over technology and worries that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.

China may respond to Trump's $US200 billion trade threat by targeting United States subsidiaries in China.

"Now, we will need to grapple with new tariffs on an additional US$200 billion worth of imports, which are bound to include even more consumer products and everyday essentials". The first round of tariffs covered Chinese products ranging from farming plows to machine tools and communications satellites.

China bought $130 billion of USA goods a year ago. So from the Chinese perspective, first of all, there's - 34 billion USA dollars of Chinese imports are being tariffed, and now there's going to be another 16 billion that's coming up.

The National Association of Manufacturers also criticized the USA decision, saying this latest round of tariffs could undermine the economic gains from the administration's tax and regulatory reform policies.

So far, China has been measured in its response to the new USA trade policy.

The move is the latest escalation of the ongoing trade war between Washington and Beijing. A full-blown global trade war would shave 0.4 percentage point off world growth, according to Bloomberg Economics. Chinese tactics, the administration says, include outright cybertheft and forcing USA companies to hand over technology in exchange for access to the Chinese market.

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