China vows retaliation for latest $200bn USA tariff threat

China vows retaliation for latest $200bn USA tariff threat

China vows retaliation for latest $200bn USA tariff threat

Financial markets could take a harder fall if China retaliates to the latest volley of USA tariffs, as Beijing has vowed, according to research firm Capital Economics.

The administration said the new levies were a response to China's decision to retaliate against the first round of U.S. tariffs.

China imported US goods worth $130 billion past year and Friday's tariff hike hit $34 billion of that, with another $16 billion cited for a possible increase.

"China is forced to strike back to safeguard core national interests and the interests of its people", the Commerce Ministry said.

The Trump administration said the proposed list, which would put 10 percent tariffs on thousands of different categories of Chinese imports, is needed to increase the pressure on Beijing to change what the us calls unfair trade practices.

The press offices for the US Trade Representative's office and White House didn't immediately comment when Bloomberg News contacted them.

"China's export sector will therefore suffer a significant deterioration in export competitiveness to the United States compared to other emerging markets' manufacturing exporters, such as Vietnam, South Korea, Thailand, Bangladesh, Mexico and Brazil", he added. When Trump first threatened last month to target another $200 billion of Chinese products, Beijing said it would be "forced to strike back hard, and launch comprehensive measures that match the USA move in quantity and quality".

The measure is a significant escalation of the conflict and easily tops the $50 billion in tariffs that the two countries have so far levied on each other, or are about to levy. That came four days after Washington added 25 per cent duties on $34 billion of Chinese goods and Beijing responded by increasing its own taxes on the same amount of American imports.

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The tariffs could take effect after public consultations end on August 30, according to a statement from the U.S. Trade Representative's office Tuesday.

Republican U.S. Senate Finance Committee Chairman Orrin Hatch said the U.S. announcement "appears reckless and is not a targeted approach".

The US Chamber of Commerce, which had supported Mr Trump's domestic tax cuts, was less enamoured of his tariff policies.

In a bid to minimize tensions both diplomatically and in the financial markets, a memo from the Chinese government was distributed to reporters outlining instructions on how to cover the tariff battle with America.

They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory.

As for China, the additional tariffs will hit its export sector hard, IHS Markit's Asia-Pacific chief economist Rajiv Biswas said in a note.

The Retail Industry Leaders Association (RILA) was quick to condemn the proposal, saying it will punish American consumers. That means China's imports of USA goods are so small that Beijing "cannot match fresh United States tariffs", said Vishnu Varathan of Mizuho Bank in a report.

The USTR, the federal agency that oversees global trade policy and negotiations, said it was responding to Beijing's decision to retaliate instead of changing its policies. But Trump hasn't backed down, arguing that China's unfair trading practices are hurting American workers.

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