Published: Fri, June 22, 2018
Finance | By Jaime Brady

China Trade: From 'Grand Bargain' towards trade war?

China Trade: From 'Grand Bargain' towards trade war?

After unveiling plans to impose additional tariffs on Chinese goods worth around 50 billion USA dollars, the United States went even further by threatening to identify 200 billion US dollars worth of Chinese products for additional tariffs.

"Further action must be taken to encourage China to change its unfair practices, open its market to United States goods and accept a more balanced trade relationship with the United States", Trump said in a statement.

"If the US becomes irrational and issues this list, China will have no choice but to adopt strong countermeasures of the same amount and quality", the Chinese Commerce Ministry said.

China vowed to protect its interests, countering any USA tariffs imposed on its goods with a mirror response.

Mr Trump's comments came hours after the top United States diplomat accused China of engaging in "predatory economics 101" and an "unprecedented level of larceny" of intellectual property.

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As the U.S. trade war with China looks set to escalate, Dr Tony Syme, expert in macroeconomics and global finance at the University of Salford Business School, comments on what the impact might be and how it could reach much further than just the two countries involved. The president said the new tariffs would affect $200 billion dollars in goods. Chips from non-Chinese wafer fabs sold to American companies that pass through those facilities likely would not be hit.

"I have to point out that United States remarks confused right with wrong and made irresponsible accusations against China to cover up its unilateral and protectionist moves", Chinese Foreign Ministry spokesman Geng Shuang said when asked to comment on Pompeo's statement.

"Everyone knows. China is the main perpetrator", he said. "President Donald J. Trump says, that's not going to happen on his watch".

Economists are starting to warn that the tit-for-tat tariff threats between the United States and China, should they all be implemented, would meaningfully slow USA growth. -China trade spat escalated and base metal prices slid. The two sides have been involved in negotiations with China offering to buy $70 billion dollars in US goods.

This possible trade war now is threading to create more pressure on the Chinese economy. Manufacturing iPhones involves nine companies, located across South Korea, Japan, Germany and the USA, and these companies ship the iPhone components to a company located in China, for assembly into final products and then exported to the United States and the rest of the world. "We will continue using all available tools to create a better and fairer trading system for all Americans". In 2017, China imported 60 percent of total USA soybean exports, representing almost 1 in 3 rows of harvested soybeans, with a value of $14 billion. Trump said Americans are now being taken advantage of when it came to trade.

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