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China says US tariff threat runs against trend of the times

04 August 2018

"Markets are now wary of the next step in the trade war between the United States and China", said Nick Twidale, chief operating officer of broker Rakuten Securities Australia. Officials in Beijing have vowed to respond with the same amount of tariffs on USA products.

"The money comes after farmers, especially soybean growers, have felt the brunt of retaliatory tariffs placed on agriculture by China and other nations that the Trump administration has penalized with tariffs on imports", NPR's Brian Naylor reported.

U.S. Trade Representative Robert Lighthizer said in a statement on Wednesday that Trump directed the increase from the previously proposed duty because China has refused to meet U.S. demands and imposed retaliatory tariffs on U.S. goods. It wants China to stop stealing USA corporate secrets, abandon plans to boost its high-tech industries at America's expense and stop subsidizing Chinese companies with cheap loans that enable them to compete unfairly.

"If we're going to use tariffs, this gives us more flexibility and it's a more meaningful threat", he said, adding that Trump's pressure strategy will not work if he does not resolve trade disputes with USA allies such as the European Union, Mexico and Canada.

China has urged the United States to "calm down" after Donald Trump threatened to impose a 25 per cent tariff on $200bn (£153m) worth of goods as punishment for it not offering trade concessions.

Meanwhile, the Information Technology Industry Council, which represents major IT users like Google, Facebook and Microsoft, immediately called the move by the administration "irresponsible, counterproductive", and said it would "only do more harm to Americans across the country".

The dynamic has proved hard to change, given US consumers' reliance on Chinese goods.

Due to the trade imbalance between the nations, China can not place tariffs on $200 billion worth of USA imports on top of an already announced $50 billion, because it does not import that many goods from the U.S.

The highest penalties in Friday's list would hit honey, vegetables, mushrooms and other farm goods, targeting areas that supported Trump in the 2016 election.

The new list includes products as varied as snow blowers and 3-D printers, suggesting Chinese authorities are struggling to find enough imports their own economy can do without.

Beijing's earlier penalty tariffs appeared to be created to minimize the impact on the Chinese economy by targeting goods such as soybeans and orange juice that are available elsewhere.

But the United States did not agree to withdraw the 25 percent tariff on European Union steel and 10 percent tariff on aluminum, which used to be a precondition for Brussels to hold any talks with Washington.

Chinese authorities warned earlier that if the dispute escalated, they would adopt unspecified "comprehensive measures".

"Pressure and blackmail from the US won't work", Geng Shuang, a spokesman for the Chinese Foreign Ministry, said at a briefing in Beijing, the New York Times reported.

The question of how exactly China will retaliate remains to be seen.

"We're not doing 19th century trade", he said.

The deficit in goods trade with China also rose.

Trump has threatened to escalate the conflict even more by taxing virtually all of the $500 billion worth of goods China ships annually to the United States.

Trump campaigned on a promise to bring down America's massive trade deficits by renegotiating trade agreements and getting tough on countries like China that sell the US far more than they buy from it.

China wasted no time in responding to the United States' proposal to increase duties. So far this year, the trade gap is up more than 7 percent from January-June 2017.

China says US tariff threat runs against trend of the times