China fires salvo in trade war with United States

Anna Jefferson
August 8, 2018

The trade policies of US President Donald Trump has been slammed by China which says the measure of "extortion" won't work.

Last Friday, China's Finance Ministry introduced new sets of additional tariffs on 5,207 goods imported from the United States worth $60 billion.

The Customs Tariff Commission of the State Council on Friday unveiled lists of 5,207 items of USA products to be subject to additional tariffs of four different rates - 25 percent, 20 percent, 10 percent, and 5 percent.

Everything from oak wood to veneered panels of laminated wood has been ensnared in China's escalation of the trade battle with the US Half of US hardwood production is exported, and the bulk goes to China, Michael Snow, executive director of the Sterling, Virginia-based American Hardwood Export Council, said Friday in a telephone interview.

If China follows through on the threat, almost 90% of all USA goods heading to China will be subject to tariffs.

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"China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs - because they are really hurting their economy", he wrote on Twitter.

China's surplus with the US swelled to a record in June as exports continued to rise, though signs of front-loading orders suggest the spike may have been a one-off. Another $16 billion in levies will likely follow in the coming days or weeks. That covers more than two-thirds of the value of China's imports from the US, but it excludes products such as big aeroplanes and some computer chips, which China struggles to produce domestically. The Chinese side seem to be seeking to match that ratio with the new proposals.

The US already imposed additional tariffs on $34 billion worth of Chinese goods earlier in July, and China has responded in kind.

Among US products targeted in the latest Chinese salvo were a wide range of agricultural and energy products, including liquefied natural gas.

"Market participants foresee a relatively stable Chinese currency in the near term, without fear of impacts from the US-China trade dispute".

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The trade war, rising corporate bankruptcies, and a steep decline in the value of the yuan versus the dollar have raised concerns that China's economy could face a steeper slowdown.

He also identified agriculture as another Valley industry that will be among those most significantly impacted.

Chinese officials have suggested in recent weeks that if the United States proceeds with tariffs on a very wide range of Chinese goods, Beijing may also retaliate against the Chinese-owned operations of big US companies.

Hopes had been rising that Trump might drop his trade-war campaign after the president announced a deal last week with European Commission President Jean-Claude Juncker that would see the U.S. and EU cut tariffs and other barriers.

"China's differential tax rate countermeasures are rational and restrained", the Ministry of Commerce said in a separate statement on its website. "Any talks in the future, should they happen, should be conducted on an equal and faithful basis", the analyst said. "Given China's huge market, its systemic advantage of being able to concentrate resources on big projects, its people's tenacity in enduring hardships and its steadiness in implementing reform and opening-up policies, the country can survive a trade war".

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Including the new tariffs already in force, China has now identified nearly 6,000 items for higher import taxes, including liquid natural gas, soybeans, and other products. Likewise, another of Mr Trump's tweets claimed that foreign countries are paying the tariffs he has imposed on steel, aluminium and a variety of products being shipped from China.

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