World markets tumble as US, China intensify their trade war

Clay Curtis
July 12, 2018

Following the introduction of reciprocal tariffs on $34 billion of the others imports on Friday, the USA, as promised, has announced a new list of 6,000 Chinese goods, totaling $200 billion, that may be hit with additional 10% tariffs by the end of next month.

The move has been swiftly and heavily criticised by China, which said it was "totally unacceptable" for America to keep escalating the trade dispute. It's unclear what that action could include.

On Friday, the USA imposed 25-percent tariffs on around $ 34 billion in Chinese goods, sparking an immediate dollar-for-dollar retaliation from Beijing.

On Friday, the U.S. imposed 25-percent tariffs on around $34 billion in Chinese goods, sparking an immediate dollar-for-dollar retaliation from Beijing. There have been no confirmed high-level talks between to two sides since early an early June visit to Beijing by U.S. Commerce Secretary Wilbur Ross that achieved no breakthroughs.

"This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies", Lighthizer added.

"The Chinese side is shocked by the actions of the USA", a statement on the ministry's website declared.

"Given China's likelihood of retaliation, it's also billions worth of new tariffs on American exporters". President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States.

One possible scenario for these tariffs could be the intention of the United States to hit the "Made in China 2025" program which is a plan for China to become one of the big players and have a key role in the global industries, an expert at Mizuho Bank said.

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Chinese tariffs have already taken a toll on USA exports such as soybeans, which raises questions about the possible political repercussions President Trump could face from farmers who supported him in the 2016 election.

However, in a statement this morning the Chinese ministry of commerce hit back, saying: "China is shocked by USA behaviour".

"For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition", US Trade Representative Robert Lighthizer said in announcing the proposed tariffs.

The list is subject to a two-month public comment period before taking effect.

Senate Finance Committee Chairman Orrin Hatch, of Utah, called the new levies "reckless" and not "targeted".

"It is a chaotic time in worldwide trade", said Li.

Trump has said continuously that China has taken advantage of the USA economy, and he has vowed to hit almost all the country's products with tariffs, as much as $450bn. The prospect of an global trade war has sent jitters through world markets.

The US Chamber of Commerce, which has supported Trump's tax cuts and efforts to reduce regulation of businesses, also criticised the administration's move.

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