China strikes back with tariffs on $60 billion of U.S. goods

Donald Trump

The US-China trade war escalated on Tuesday, with China announcing retaliatory tax increases on US$60 billion (NZ$91 billion) worth of US imports, including coffee, honey and industrial chemicals.

"China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers due to their loyalty to me", Trump said on Twitter.

"There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!"

'The tariffs will take effect on September 24, 2018, and be set at a level of 10 percent until the end of the year.

Despite this threat, China's commerce ministry said today that it had no choice but to retaliate against United States trade tariffs, adding that it hopes the USA will realize the negative consequences of its actions and correct its behavior. "They also know that I am the one that knows how to stop it", he continued.

Steel and other metal products are among the goods included in President Trump's latest round of tariffs against Chinese imports, and come months after a similar tax on imported metals.

Trump initiated the fight to punish Beijing for what he says are China's predatory tactics to try to supplant US technological supremacy.

"(China) is not anxious that the U.S. trade counter measures will raise domestic commodity prices by too much but will instead use it as an opportunity to replace imports, promote localization or develop export-oriented advanced manufacturing", it said.

US President Donald Trump's opening salvo in an ongoing trade war with China began in March this year with a trade memo which covered around $60 billion in imports.

While both sides said they were open to talks, Trump launched a Twitter broadside at China, accusing Beijing of targeting rural voters who had supported his presidency by hitting agricultural goods.

Tariffs tend to increase consumer prices, but analysts say the increase in prices from Trump's tariffs is likely to be small, at least for now. The administration is targeting a bewildering variety of goods - from sockeye salmon to baseball gloves to bamboo mats - forcing USA companies to scramble for suppliers outside China, absorb the import taxes or pass along the cost to their customers.

"China has been taking advantage of the United States for a long time, and I can't let that happen anymore", he said. Business leaders are warning the high-stakes strategy could upend their supply chains and raise costs, as economists worry Trump's tactics could derail the broadest global upswing in years.

Past studies have shown that Chinese suppliers provide Walmart with as much as 70 per cent of the goods the retail giant sells each year - a relationship that highlights how both China and the USA would hurt if trade stopped or substantially slowed.

China's Vice-Premier Liu He may cancel his visit to the US capital next week to restart negotiations with Treasury Secretary Steven Mnuchin, the South China Morning Post reported. The Trump administration in July and August already imposed 25% tariffs on $50bn on Chinese goods, sparking in-kind retaliation. This should have been done for the last 20 years. "There are many legitimate trade concerns US companies have in the global marketplace, but tariffs are unwieldy and often counterproductive to address those problems". "They hope to change US presidents", Xia argued.

U.S. Commerce Secretary Wilbur Ross said on Tuesday the next step on holding "constructive negotiations" was up to China. "We don't want to do it but we probably will have no choice". "We're going to see how the customer votes on this".