Trump administration ups ante in trade fight with China

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The issue of China's response to US threats of higher tariffs also came up during the daily news briefing by the Chinese Foreign Ministry.

While talks earlier this week between Beijing and Washington were not fruitful, a decision by the Trump administration to impose tougher tariffs could soften China's stance or escalate the trade war between the world's two biggest economies.

China's foreign ministry called this "blackmail" and warned that policies like this would "only produce the opposite of the desired result".

Foreign Ministry spokesman Geng Shuang told a daily news briefing in Beijing that USA pressure on trade won't work, and that Beijing has always upheld using dialogue to resolve trade issues.

"Our door for dialogue is always open".

The highest penalties on the new list would be imposed on honey, vegetables, mushrooms and chemicals, targeting farming and mining areas that supported President Donald Trump in the 2016 election.

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Increasing the rates to 25 per cent could make them significantly more painful.

The proposed tariff increase poses big risks for both the USA and global economy.

Investors fear an escalating trade war between Washington and Beijing could hit global economic growth, and prominent USA business groups, while tired of what they see as China's mercantilist trade practices, have condemned Trump's aggressive tariffs.

U.S. President Donald Trump attends a meeting with inner city pastors at the Cabinet Room of the White House in Washington D.C., U.S., August 1, 2018. The yuan fell against a trade-weighted basket of currencies to a level that's near the lowest on record, suggesting policy makers are allowing further weakness. The comment period was set to take place later this month, but will now be extended into September, officials said.

That strategy, it said, "doesn't work for China at all". Because China imports far less from the USA than the US imports from China, it can't keep up tit-for-tat tariffs. Beijing retaliated by imposing similar charges on the same amount of us products.

"The US side has repeatedly escalated the situation against the interests of both enterprises and consumers", the Chinese Commerce Ministry said in its statement. So far this year (through July 3), a basket of stocks compiled by Goldman Sachs representing companies that derive 100% of revenues in the U.S.is up 5%, compared with a 1% gain for firms with a preponderance of global sales. That case concluded China was stealing American technology and tariffs were needed to offset the damage. The Mexicans, for example, targeted USA pork and cheese. The U.S. exports goods to China amounting to $130 bln, so it is unlikely that it will be able to respond with a proportionate expansion. But within days, Trump himself backed away from the deal, saying talks would "probably have to use a different structure".

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