China vows retaliation for $200 billion US tariff threat

China vows retaliation for $200 billion US tariff threat

Mr. Trump hit US$34-billion worth of Chinese imports with 25-per-cent tariffs starting last week, with another US$16-billion worth to be added shortly.

Among the potential ways Beijing could hit back are "qualitative measures", a threat that USA businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

"The threat of more trade barriers is unlikely to sway China from its plan to make its domestic chip industry self-reliant, and to create a strong supply chain as a key enabler for innovation in other technologically intensive industries", analysts at BMI Research said in a note to clients Tuesday.

The U.S. Trade Representative is taking comments on these proposed tariffs until August 17.

On Tuesday, the president made good on his threat with the announcement of the new tariffs.

"This new round of proposed tariffs takes the fight onto yet another level from which it is going to be hard for either side to make a graceful retreat", said Eswar Prasad, former head of the International Monteary Fund's China division.

Investors fear an escalating trade war between the world's two biggest economies could hit global growth. And China's retaliation was targeted at soy farmers and others in the U.S. Republican heartland.

The U.S. Trade Representative announced Tuesday a possible second round of tariff hikes targeting a $200 billion USA list of Chinese goods ranging from burglar alarms to mackerel.

For more than a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition.

"The United States has unveiled the list of tariffs in an escalating manner".

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In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent.

"They are a vital trading partner, and we need to continue to do business with China without the sting of these tariffs", said American Soybean Association President John Heisdorffer in a news release.

"Depending on how these trade negotiations do develop, we do anticipate that there could be another rate hike by the end of 2018, but if trade negotiations deteriorate that may get pushed out further in 2019".

While disclosing a strategy of "splitting apart different domestic groups in U.S.", the notice explains: "The trade conflict is really a war against China's rise, to see who has the greater stamina".

The National Association of Manufacturers also criticized the US decision, saying this latest round of tariffs could undermine the economic gains from the administration's tax and regulatory reform policies.

China formally responded to the latest United States move on Wednesday, with a Chinese Ministry of Commerce spokesperson calling it "unacceptable".

Beijing has said it would hit back against Washington's escalating tariff measures, including through "qualitative measures", a threat that USA businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

The Dow Jones Industrial Average .DJI fell 195.89 points, or 0.79 percent, to 24,723.77, the S&P 500 .SPX lost 17.65 points, or 0.63 percent, to 2,776.19 and the Nasdaq Composite .IXIC dropped 34.64 points, or 0.45 percent, to 7,724.56.

This was the "result of China's retaliation and failure to change its practices", the statement said, in reference to Beijing's retaliatory tariffs after the United States last Friday imposed 25 per cent tariffs on US$34 billion of Chinese goods it imports, with tariffs on another US$16 billion to kick in soon.

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