China Hits Back With 25% Tariff On US Imports

Saul Bowman
April 5, 2018

Soya beans are the top U.S. agricultural export to China and were among the 106 products on which China intends to impose the additional tariffs.

The Chinese Ministry of Commerce confirmed the step taken Wednesday at the Geneva-based trade body, which triggers the WTO's dispute settlement mechanism that will begin with consultations between the two countries.

It said a 25 per cent tariff would be imposed and the date the charges will take effect would be announced later.

The trade war has anxious American farmers, particularly producers of goods such as soya beans.

President Donald Trump's top economic adviser, Larry Kudlow, suggested the US tariffs won't be implemented if China lowers barriers to trade.

USA crude fell 92 cents, or 1.4 percent, to $62.59 a barrel in NY while Brent crude, used to price global oils, fell 91 cents, or 1.3 percent, to $67.21 a barrel in London. "I can only hope that we solve our differences as soon as possible to avoid damage to the USA economy, Chinese economy and to USA companies".

All major European markets including London's FTSE (-1.86pc) and Dublin's ISEQ (-0.9pc) were down, with Frankfurt's DAX falling 0.93pc and Paris' CAC down 0.54pc this afternoon.

Last year, the United States ran a $375bn trade deficit with China, which Trump wants to see reduced by $100bn.

The market suffered a sharp dive after the opening bell after China struck back against the USA with threats to levy tariffs on more than 100 American-made goods ranging from autos to airplanes, as traders initially feared that it signaled an escalation in the trade fight between the world's two biggest economies.

Beijing has announced a $50 billion list of USA goods for possible tariff hikes in a spiraling technology dispute with Washington. The Trump administration on Tuesday released a list of 1,300 imported Chinese products, including industrial robots and telecoms gear, subject to potential tariffs to protest Beijing's alleged theft of us technology.

Trump said on March 22 the tariffs were aimed at penalizing Beijing for what the USA alleges to be theft of American companies' intellectual property. "A lot of people are saying this affects many big companies on the NY stock exchange and that's why so many people are anxious".

Zarit said he still hopes Washington and Beijing will not follow through on their threats. "If they want to negotiate, the door is open".

The US worries that China is involved in cyberespionage and unfair government subsidisation that is helping China advance in technology.

The United States buys little steel and aluminum from China, but analysts said Beijing felt compelled to respond, partly as a "warning shot" ahead of an expected fight over technology. Business groups say companies feel unwelcome in China's state-dominated economy and are being squeezed out of promising industries.

Foreign companies are increasingly alarmed by initiatives such as Beijing's long-range industry development plan, dubbed "Made in China 2025", which calls for creating global leaders in electric cars, robots and other fields.

Wang said the plan, which sets specific targets for domestic brands' share of some markets, should be seen as a guide rather than mandatory.

Industrial companies were rocked.

"It will not succeed this time either", foreign ministry spokesman Geng Shuang said at a regular news briefing on Wednesday.

"But the best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the U.S. side", he told a regular briefing on Wednesday.

"If China doesn't play by the rules, it should lose some of its access to the USA market", said alliance president Scott Paul.

He said talks between the two countries require "mutual respect and equal treatment, instead of being coerced by one party unilaterally and condescendingly".

Whether or not a trade agreement is eventually struck between the USA and China, heightened trade tensions will be the new normal for the foreseeable future, he says.

"I resolutely support all trade measures China is taking against the United States", said another user who said he would boycott USA and South Korean products.

"What is it about a washing machine, made in China, that warrants a quota?"

USA trade policy has loomed over the markets since early March.

Gold, considered a safe-haven investment, is up 0.2 percent. The retaliatory measures came a day after the Trump administration threatened stiff new tariffs on some $50 billion Chinese imports across 1,300 categories of products.

A deputy finance minister, Zhu Guangyao, appealed to Washington to "work in a constructive manner" and avoid hurting both countries.

The Chinese government announced plans to impose tariffs of 25 percent on a list of more than 100 us goods worth $50 billion, including soybeans, the largest USA export to China, and aircraft.

China's Commerce and Finance ministries announced that Beijing's list of 25 percent additional tariffs on United States goods covered 106 items with a trade value matching the $50 billion figure.

BNP's Tchilinguirian said the oil market may likely "look past" any inventory data until the implications of the U.S.

"I am much, much more concerned about where stocks close today rather than where they opened", he says.

China's commerce ministry said it would hit back with "equal scale and equal intensity", and outlined that 106 USA products in 14 categories would attract an extra 25 per cent tariff.

Jim Boyce, a Beijing-based wine consultant who writes the blog Grapewallofchina, said while there were concerns that the duties would make US wine less cost-competitive, the greater worry was over the image the trade war would generate for USA goods.

US President Donald Trump signs the order to impose tariffs of 25 percent on steel imports and 10 percent on aluminum citing national security concerns.

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