Trade wars: More US tariffs expected on Chinese imports

Trade wars: More US tariffs expected on Chinese imports

China implemented retaliatory tariffs on some imports from the US on Friday, immediately after new USA duties had taken effect. "Tariffs will negate gains made by the public from tax reforms and deregulation, push up USA production costs, damage the competitiveness of businesses and their workers, and force companies to look outside the U.S.to maintain production".

China's Commerce Ministry said it would be "forced to make a necessary counterattack".

Analysts at Bank of America Merrill Lynch forecast only a modest escalation in the US-China battle, adding: "However, we can't rule out a full-blown, recession-inducing "trade war".

The dollar fell Friday as markets weighed a stronger-than-expected jobs market with an escalating trade battle between the USA and China.

While Chinese state media have slammed Trump's protectionism and on Friday likened his administration to a "gang of hoodlums", the trade conflict has gained little traction on China's tightly controlled social media, not cracking the 50 top-searched topics on the Twitter-like Weibo platform.

Washington increased tariffs at 12:01am on $US34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs.

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Chinese stocks actually rose after the announcement with the benchmark Shanghai Composite Index up almost one percent and the broader Shenzhen index climbing more than one percent.

Beijing apparently agrees: State-run news outlet Xinhua reposted the commentary on its website (link in Chinese).

"One of the biggest competitive advantages of Chinese exports is their low price".

The first round targets Chinese industrial goods, not consumer products, in an attempt to limit the impact on USA households, but companies that rely on Chinese-made machinery or components may eventually have to pass along increased costs to customers. And it appears some USA companies are already dealing with the fallout.

Speaking hours after the tit-for-tat duties went into effect, Chinese Premier Li Keqiang said no one would emerge a victor from a trade war.

Trump has threatened to raise tariffs on China to roughly the value of total Chinese exports to the USA past year of $506bn.

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Another $16 billion are expected to go into effect in two weeks and potentially another $500 billion, Trump told reporters aboard Air Force One on his way to Montana before the tariffs kicked in. "So we have 50 plus 200 plus nearly 300", he said.

"For companies with supply exposure to tariffs, they will move sourcing country of origin if they can; if they can't, they'll pass on as much of the tariff cost as they can, or see a cut in margins", said Jacob Parker, vice president of China operations at the U.S.

Trump's tariffs are the result of an investigation by the administration into the theft of USA intellectual property by Chinese firms and their government.

"The progress of China's economy can not be reversed by any force". Domestic consumption now accounts for more than half of the country's GDP.

The US Chamber of Commerce says some states will have billions of dollars worth of exports at risk.

While China has signalled a willingness to buy more American goods to balance out the deficit, it has refused to trade away what it views as an essential part of its economic future.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying USA coal and heading for China was diverted on Wednesday to Singapore.

Substantial they may be, but the average USA consumer will likely not see these impacts directly for a little while.

China's Ministry of Commerce also said it would look to report the U.S.to the World Trade Organization (WTO) on Friday, accusing Washington of breaching worldwide trade laws.

Morgan Stanley estimates that world trade could be seriously disrupted as two-thirds of goods traded are linked to global value chains.

"But the tariffs will bring double-lose results".

"China can make it much more hard to operate on the mainland", Haft says. "Reining in China's abusive trade policies is a goal shared by many countries, but a strategy based on unilateral tariffs is the wrong approach and it has to stop".

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