Published: Sun, July 15, 2018
Finance | By Jaime Brady

China Will Hit Back After New US Tariffs

China Will Hit Back After New US Tariffs

They will be added to the $34 billion worth of duties that came into effect on July 6. American exports to China totaled only US$130 billion a year ago, so the Chinese will have to look beyond tariffs in crafting those countermeasures. The ministry did not offer more details, but Beijing had earlier threatened "comprehensive measures" if more tariffs were imposed. It said, "the Chinese government will be forced to impose necessary countermeasures" to protect its "core interests".

The administration will hold hearings on the proposed list late next month.

Concerns about an escalating U.S.

Trump has been following through on pledges he made during his presidential campaign to get tough on China, which he accuses of unfair trade practices, including theft of intellectual property and forced technology transfer, that have led to a $375 billion USA trade deficit with China.

China imported only 130 billion dollars in goods from the USA previous year, but it could retaliate against the U.S. through other means including regulatory moves and investigations of United States companies.

The initial USA tariff list focused on Chinese industrial products in an attempt to limit the impact on American consumers.

That intensification of the trade conflict, which commentators are increasingly calling a full-scale trade war, has investors spooked about the future of the global world order and the global economy, pushing stock markets around the world deep into the red.

In Asia, Japan's benchmark Nikkei 225 fell 1.2 percent to 21,932.21 and South Korea's Kospi lost 0.6 percent to finish at 2,280.62.

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"Consumers are feeling good, but if they see prices start going up, there could be a backlash", said Rod Sides, U.S. leader of retail at Deloitte.

Some American business groups and senior lawmakers sharply criticized the latest action on Tuesday, with Senate Finance Committee Chairman Orrin Hatch, a Republican, saying it "appears reckless and is not a targeted approach".

"We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy".

Jack Ablin, chief investment officer for Cresset Wealth Advisors, said tariffs can have big effects: a tariff on an import from one country can lead to broad price increases for similar items, and rising taxes and costs might cause companies to change their supply lines in less efficient ways.

The overall blow from Friday's tariff hikes to the world's second-largest economy should be limited, according to private sector analysts.

"Our president is going to keep fighting for trade deals that are free and fair and reciprocal", Pence said.

"Resolving these challenges in an equitable manner is essential for the United States and China to have a healthy long-term commercial relationship that brings benefits to both our peoples", it said in a statement on the survey results.

The survey showed that while US companies continue to face challenges in China, 34 percent of respondents felt Chinese government policies toward foreign companies had improved, up from 28 percent previous year. "Regrettably, the US side did not honour its words, chopping and changing all the time".

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