Trade war heats up

The United States and China slapped tit-for-tat duties on $34 billion worth of the other’s imports on Friday, with Beijing accusing Washington of triggering the “largest-scale trade war” ever in a sharp escalation of their months-long conflict.

Hours before Washington’s deadline for the tariffs to take effect, U.S. President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year.

China’s commerce ministry, in a statement shortly after the U.S. deadline passed at 0401 GMT on Friday, said that it was forced to retaliate, meaning $34 billion worth of imported U.S. goods including autos and agricultural products also faced 25 percent tariffs. However, an ensuing three-plus hour delay before Beijing confirmed that it had implemented retaliatory tariffs sowed confusion in markets.

China’s commerce ministry called the U.S. actions “a violation of world trade rules” and said that it had “initiated the largest-scale trade war in economic history.”

Trump has railed against Beijing for intellectual property theft and barriers to entry for U.S. businesses and a $375 billion U.S. trade deficit with China.

“This is not economic Armageddon. We will not have to hunt our food with pointy sticks. But it is applying the brakes to a global economy that has less durable momentum than appears to be the case,” Rob Carnell, chief economist at ING, said in a note.

U.S. Customs and Border Protection officials were due to collect 25 percent duties on a range of products including motor vehicles, computer disk drives, parts of pumps, valves and printers and many other industrial components.

China’s tariffs on hundreds of U.S. goods include top exports such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 U.S. election, such as Texas and Iowa.

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