China hits back after USA imposes tariffs worth $34bn

Jul 08, 2018, 00:25
China hits back after USA imposes tariffs worth $34bn

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

President Donald Trump said more than $500 billion in Chinese products could ultimately be penalized.

Addressing the lower house of parliament in Berlin, Merkel said the global response to the market meltdown a decade ago showed that cooperation works better than one-sided measures. "We are the casualty and predicted it from day one".

The tariffs would mark a significant escalation in the trade dispute between the world's two biggest economies.

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

Friday's tariffs could just be the opening skirmishes in the war, as Trump has vowed to hit as much as $450 billion in Chinese goods, the vast majority of imports.

Businesses will have to pay 25 percent additional tax on $US34b of certain Chinese products they import - including aircraft tyres and commercial dishwashers.

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Beijing earlier released a target list of $34 billion worth of imported USA goods, including automobiles and agricultural products that also faced 25 percent tariffs.

He went on, "If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another $200 billion of goods".

How did we get here?

After months of speculation as to whether or not it would occur, the trade war between the United States and China is now underway in earnest. These tactics include cyber-theft as well as requiring American companies to hand over technology in exchange for access to China's market. -China tit-for-tat tariff fight is likely to shrink trade volume worldwide, which would weigh on the global economy that has been on a recovery track.

In addition to the $US16b under consultation, Mr Trump has flagged there could be more tariffs in store.

The president believes this is the best way to close the trade deficit between the USA and China.

Stock markets have been jittery ahead of the announcement and are estimated to have lost market value due to trade tensions.

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As the tariffs approached, the United States central bank warned the impending trade battle was beginning to darken the otherwise blue skies of the robust American economy, now in its 10th year of recovery.

Tariffs imposed so far by all sides affect about $60 billion of goods, or 0.3 per cent of world trade, according to Slater.

Analysts are also concerned about the impact on others in the supply chain and about an escalation of tensions between the U.S. and China in general.

Hours before Washington's deadline for the tariffs to take effect, President Trump upped the ante on its largest trading partner, warning that the United States may ultimately target more than $500 billion worth of Chinese goods - that's roughly the total of USA imports from China previous year.

Shaun Rein, managing director at the China Market Research Group in Shanghai, said the Chinese government's next play could be to stoke anti-American sentiments among consumers - similar to the boycotts it ordered past year on South Korea's Lotte Group, which caused dozens of the company's convenience stores to shutter.

"China will not bow in the face of threats and blackmail, nor will it be shaken in its resolve to defend global free trade", said ministry spokesman Gao Feng at a news conference. "China economic relationship will negatively impact their operations in China", he said.

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