China vows to hit back over US proposal for fresh tariffs


It was originally reported by Megan Cassella and Doug Palmer on July 11, 2018.

China accused the United States of bullying and warned it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10 percent tariffs on $200 billion of Chinese goods in a move that rattled global markets.

Adding $200 billion in goods to the list of existing tariffs would bring the total value of tariffed goods to $450 billion-just shy of the $505 billion in exports that China sends to the U.S. Trump had threatened this level of escalation as early as last week, before the current tariffs even went into effect.

The Chinese government vowed Wednesday to take "firm and forceful measures" against US threats to expand tariff hikes to thousands of products like fish sticks, apples and French doors as their trade dispute escalates.

In Brussels, a top European Commission official, Vice-President Valdis Dombrovskis, said he was "concerned" about an "immediate economic impact" from not only the latest tensions but also about a broader unravelling of the multilateral trading system.

Jack Gerard, Cal Dooley, and Edward R. Hamberger-the president and CEO of the American Petroleum Institute, president and CEO of the American Chemistry Council, and president and CEO of the Association of American Railroads, respectively-wrote in an opinion piece in the Washington Examiner published on Wednesday that the trade war is threatening the USA economy and could add "hundreds of billions of dollars in potential costs for American businesses - costs that could ultimately be borne by consumers".

However, Mexico's firebrand President-elect Andres Manuel Lopez Obrador, known as "AMLO", has vowed to work with the U.S. to revise the trade pact.

But Trump, for his part, showed no sign of reconciling with China.

China bought US$130 billion of USA goods past year.

"Farmers have done poorly for 15 years".

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"Companies in both countries will suffer losses".

So far, tariffs imposed by the two countries are expected to have a modest impact on growth and inflation, economists estimate.

The Wall Street Journal, citing "people with knowledge of the previous rounds of negotiations" said the offer made by China so far, "whether they are increasing purchases of U.S. products or the gradual opening of financial-services sector" had "failed to solve Washington's demands for deeper structural changes".

The growing share of worldwide trade under threat has raised the prospect the escalating trade war could harm the global economy, shrinking investments and undermining supply chains.

Despite bipartisan support, the Trump administration's latest move drew criticism from House Speaker Paul Ryan, who is retiring at the end of his term in January. The producer of chemical compounds used in electronics only ships 10% of its product to the U.S., but had wanted to expand there, according to Mr. Ma, a sales manager who only gave his last name.

"The question is less whether we can do harm to them than, which one can endure the pain the better? I think China hopes it can minimize the departure out of China of multinational firms", said Louis Kuijs, Hong Kong-based head of Asia Economics at Oxford Economics.

The tariffs will not be imposed immediately but will undergo a two-month review process with hearings from August 20 to 23.

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. That would leave China only US$80 billion for further retaliation. The Trump administration on Tuesday released a proposed list of an additional $200 billion in Chinese goods to be hit with tariffs. "It seriously jeopardizes the global industrial chain, ... hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers". The Senate on Wednesday handily passed a symbolic measure instructing lawmakers working to reconcile an unrelated spending bill to include language "providing a role" for Congress when the president invokes national security reasons to justify tariffs.

The administration said the new levies were a response to China's decision to retaliate against the first round of U.S. tariffs.