U.S., China fire first shots in tariff war

China rejects ‘blackmail’ on eve of US tariff hike

The lists of goods to be hit by tariffs have been updated several times by both administrations. "Some firms may cut China out of their supply chain, but in other cases it will make economic sense to move US production overseas".

Economic Development Minister Maxim Oreshkin said in a statement Friday that additional tariffs ranging from 25 to 40 percent have been applied to some road construction equipment, oil and gas equipment, metal processing instruments, drilling equipment and optical fiber.

Beijing accused Washington of launching "the largest trade war in economic history" and vowed to take the case to the World Trade Organization. The cheese tariffs were put in place in response to an earlier tariff move by the Trump administration.

Even though the tariffs just kicked in, they were approved in back in March and have already managed to make a negative impact.

Foreign companies accounted for $20 billion, or 59%, of the $34 billion of exports from China that would be subject to new U.S. tariffs, with United States firms accounting for a significant part of that 59%, Gao said.

"In addition, the second-order effects, such as a potential decline in the stock market and corresponding fall in household net worth/consumer confidence, are another threat that could compound the direct effect on growth from a full-blown trade war". No exact date was given.

A trade deficit is where a country's imports exceed its exports.

Despite three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump made a decision to go ahead with the tariffs.

The negotiations began in August but have stalled over US demands created to discourage investment in Mexico and to shift auto production back to the United States. The European slammed the move as protectionism and slapped counter-measures on USA products. American officials worry US industrial leadership will be eroded by Chinese plans to create tech champions in fields including robotics, biotech and artificial intelligence.

A China central bank adviser said the planned United States import tariffs on $50 billion worth of Chinese goods - $34 billion plus a planned follow-on list worth $16 billion - will cut China's economic growth by 0.2 percentage points, although the overall impact would be limited, the official Xinhua news agency said today. Eastern time Friday on $34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs. The damage could also spread to other economies, hurting business confidence and prompting companies to delay investments.

Both the USA and China imposed punitive tariffs on each other's exports today in what Beijing calls "the biggest trade war in economic history".

"This kind of tariff is a typical trade bullying", the statement said, "which is seriously jeopardizing the global industrial chain and value chain security, hindering the pace of global economic recovery, triggering global market turmoil, and will affect more innocent multinational corporations, general enterprises and ordinary countries".

Tokyo closed 1.1% higher, but Hong Kong fell 0.5% in late trading.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union. Beijing has announced reforms this year including ending limits on foreign ownership in its auto industry, but none directly addresses complaints that are fueling its conflict with Washington.

USA customs officers imposed the first duties on $34 billion in Chinese goods early Friday, prompting Beijing to announce that it had no choice but to swing back, appearing to target farmers in America's heartland.

The White House had previously said it would consult on tariffs on another $16bn of products, which Mr Trump has suggested could come into effect later this month.

That could bring the total of targeted Chinese goods to US$550 billion - more than the US$506 billion in goods that China shipped to the U.S. past year.

Chinese officials reject accusations of theft and say no foreign company is obligated to share technology.

Beijing has vowed to respond immediately with an equal amount of tariffs of its own against United States autos, agricultural and other products.

On Thursday, Ford Motor Co said that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China. The rest of the world would suffer collateral damage, even if the U.S. were to refrain from penalising imports from other countries.

Beijing hit back on Friday with tariffs worth $34bn and has said it will match Trump's $50bn threat. USA stocks edged higher on Thursday, however, amid hopes that American trade tensions with Europe may ease after comments from German Chancellor Angela Merkel. -Chinese tensions, Zarit said.

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