Trump Moves to Retaliate Against China's Retaliation for New Tariffs

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If China looks to raise its tariffs on USA goods again, President Trump plans to tack additional tariffs on another US$200bn worth of goods.

It could also be that he thinks China will run out of United States imports against which to retaliate.

In Beijing, China's Commerce Ministry responded swiftly to Trump's latest threat, warning that if the USA imposed fresh tariffs, China would have to adopt "comprehensive measures combining quantity and quality to make a strong countermeasure". China's trade surplus with the USA past year was about $375 billion.

"The fundamental reality is that talk is cheap", White House advisor Peter Navarro told reporters on a conference call, adding Beijing "may have underestimated the resolve of President Donald J. Trump".

"I always say, "We have rebuilt China". "A US-China trade spat alone won't hurt global growth".

Set to an unflattering picture of Trump with his hair flying in the wind, the WeChat account of the ruling Communist Party's People's Daily said China had the confidence and the ability to win the trade battle.

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Monday night's move sent global stock markets sharply lower and the Dow followed suit when it opened, dropping over 340 points (1.37%) in early trading. US bond yields fell in a flight to safety. Commodities such as oil, copper and soybeans fell.

China's commerce ministry warned on Tuesday that Beijing would fight back firmly with "qualitative" and "quantitative" measures if the United States implements more tariffs.

"The trade relationship between the United States and China must be much more equitable", the president said in explaining his decision.

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European Chamber President Mats Harborn said at a briefing on the group's survey that 2018 had to be the year when Beijing delivered on its promises, and that it should make serious commitments to defuse trade tensions. He criticized China's trade policies as "predatory".

The Footware Distributors and Retailers of America, though, rebuked Trump for his comment in a statement.

The move followed tariffs applied last week on United States dollars 50 billion in Chinese imports to the US.

Monday's tariff threat comes on top of $34 billion of Chinese goods subject to an extra 25 percent tariff effective July 6 in response to complaints Beijing steals or pressures companies to hand over technology.

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for us goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said. He said China was taking intellectual property at a level never before seen.

The tit-for-tat moves could start to meaningfully slow USA growth, economists warn.

The US wants China to stop practices that allegedly encourage transfer of intellectual property - design and product ideas - to Chinese companies, such as requirements that foreign firms share ownership with local partners to access the Chinese market.

Beijing has mounted campaigns against Japanese and South Korean companies in the past after diplomatic disputes.

That happened after the US President gave some clues about the possibility for introducing new tariffs on the US $200 billion worth of Chinese goods.

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