Global stocks, oil suffer as US-China trade spat heats up

Gladys Abbott
June 22, 2018

President Donald Trump has directed the US Trade Representative to prepare new tariffs on 200 billion dollars (£150 billion) in Chinese imports as the two nations moved closer to a potential trade war.

A Commerce Ministry statement criticized the USA measures as "extreme pressure and blackmail".

"The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends", the country's Commerce Ministry said in a statement, according to CNBC.

If the tariff hike goes ahead, "China will have to adopt comprehensive measures that combine quantity and quality", the statement said.

Trump had already warned last week of "additional tariffs" should Beijing hit back with tit-for-tat duties on American goods.

In a speech to the Detroit Economic Club on Monday, Secretary of State Mike Pompeo accused China of "an unprecedented level of larceny," NPR's Michelle Kelemen reports. At a combined $450bn worth of goods tariffed, the U.S. will have placed tariffs on all but 10% of the $505bn worth of goods imported from China in 2017.

If China looks to raise its tariffs on USA goods again, President Trump plans to tack additional tariffs on another US$200bn worth of goods.

The Chinese Commerce Ministry responded that it would "strike back hard" with "measures that match the U.S. move in quantity and quality".

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In a call with reporters reported by Bloomberg on Monday, Navarro said he had no information about the deal, signaling that Trump could have made the agreement with Apple without consulting his top trade advisers. The sources say that China could play the "national security" card to prevent Apple's contract manufacturers like Foxconn from receiving the constant flow of parts needed to keep iPhone assembly lines running smoothly.

For months, the US and China have traded tit-for-tat trade threats, and they have escalated again in just the last few days. China buys around $1 billion worth of American sorghum each year.

Read: What can Beijing do if China-US trade row worsens?

Mr Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.

And as Mr Trump increases the range of goods subject to tariffs it becomes harder for American importers and consumers to avoid the cost by finding alternative suppliers. But the lopsided status of U.S.

USA tariffs that affect more than 800 Chinese products worth $34bn in annual trade are due to come into effect on 6 July.

"It looks like the probability of a full-blown trade war between the world's two largest economies is rising", said Louis Kuijs, an economist at Oxford Economics. Although China has a total of only USD130bn to put tariffs on (versus the USD500bn of Chinese imports into the US), China has other tools to use in the trade conflict.

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