United States trade measures will backfire

Gladys Abbott
July 9, 2018

China's foreign ministry in Beijing said that tit-for-tat duties on USA goods took effect straight away after Washington's 25 percent tariff on $34 billion worth of Chinese goods kicked in at 12:01 a.m. EDT on Friday.

China's commerce ministry earlier said the country has no choice but to fight back after the United States "launched the largest trade war in economic history." .

Beijing had said it would retaliate with punitive measures on U.S. products worth a similar amount, including soybeans, pork and cotton, but it had not officially confirmed that they had taken effect.

Meanwhile, Russia said it would introduce extra duties on a range of products imported from the US.

A spokesperson at China's Ministry of Commerce said Friday that while the Asian giant had refused to "fire the first shot", it was being forced to respond after the USA had "launched the largest trade war in economic history".

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union.

China has said it will not "fire the first shot" in a trade war with the United States, but its customs agency made clear on Thursday that Chinese tariffs on American goods would take effect immediately after USA duties on Chinese goods are put in place.

Beijing previously issued a list of American commodities, including soybean and electric cars, worth $34 billion, which it said would be subject to 25 per cent tariffs.

US President Donald Trump last Thursday upped the ante on his country's largest trading partner, warning that the United States may ultimately target more than US$500 billion worth of Chinese goods, roughly the total amount of US imports from China previous year.

President Trump, on Thursday, warned there is more to come, with tariffs on more than $500 billion of goods possible in subsequent rounds. USA soybean farmers have been particularly concerned, and the price of soybeans has plunged 17 percent over the past month on tariff fears.

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I view these tariffs as a negotiating ploy by President Trump to try to force the Chinese to open up their market better for American companies. That conjures the image of this being a cool, calm, collected game of chess on both sides: Washington and Beijing.

The Chinese Foreign Ministry said "retaliatory tariffs" took effect.

The US decision to pursue a trade war has eroded the confidence of importers, and could cause a mess in the global supply chain, said Li Yong from China Association of International Trade.

"There are no winners in a trade war", he said.

The Trump administration contends that China has deployed predatory tactics in a push to overtake US technological dominance.

The imbroglio began in April, when the Trump administration announced that it would impose import duties of 25% on Chinese products to punish the country for what the administration said were unfair trade practices.

While the U.S. tariffs aim to cut down the trade deficit, there are worries about how China's retaliatory tariffs will hit the USA economy.

A wine merchant in Shanghai, one of the country's busiest trading hubs, said customs brokers were also slowing the clearance process because of confusion about how and when to implement duties.

In response, China immediately slapped an identical tariff on US imports of the same value, with aquaculture products, automobiles and soybeans the hardest hit.

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?" It said they would damage the global economy unless other countries stop them.

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