China hits back after USA imposes tariffs worth $34bn

GETTYThe US President has escalated tensions that could lead to a trade war

GETTYThe US President has escalated tensions that could lead to a trade war

President Donald Trump says he has tariffs on hundreds of billions of dollars in more Chinese goods ready in his pocket - if it comes to that - while China says the USA has launched the biggest trade war in history.

While market jitters over USA trade policy intensified in recent weeks, Wall Street had a tempered reaction to the rollout of US tariffs on $34 billion in Chinese imports.

US President Donald Trump gestures during a Make America Great Again rally in Great Falls, Montana, U.S., July 5, 2018.

The paper holds that the tariffs will affect several US sectors, including technology (which Trump says he's trying to protect) while hitting multinational supply chains and firms, as well as harming foreign investment in Chinese firms by allies such as Japan, South Korea, and European Union countries. Soybean futures have fallen from $10.42 a bushel in late May to $8.95 Friday, a drop of 14 percent.

After that, the hostilities could intensify: Trump said the ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing does not yield to US demands and continues to retaliate. But it is expected to quickly retaliate with a similar amount of tariffs on American goods, including soybeans, electric cars and whiskey.

"China promised to not fire the first shot, but to defend national core interests and the interests of the people it has no choice but to strike back as necessary", said the Ministry of Commerce.

The Chinese government on Monday convened a meeting of a newly formed financial stability and development committee, headed by Vice-Premier Liu He, who led the trade talks with the US.

But given the complicated nature of global supply chains, President Trump's tariffs are also harming other businesses far and wide.

The lack of any dramatic reaction suggests many market players have already factored the escalation in trade tensions into their trading strategies.

These would hit USA energy exports, such as coal and crude oil, among other areas.

Substantial they may be, but the average USA consumer will likely not see these impacts directly for a little while.

One study said the losses could reach as high as 400,000 jobs.Iconic American motorcycle brand Harley Davidson announced plans to move production overseas to evade the EU's retaliatory tariffs, drawing a barrage of attacks on Twitter from Trump. "Simply put, the opening fire on the whole world, and also firing at itself", Gao said.

But eventually those costs will take their toll on the average wallet, and it likely won't be simply because of these tariffs.

"China has already made preparations", Lu told a daily news briefing. "For example, they can quarantine [U.S.] products for a long time".

They are imposed to increase the price of foreign goods to make domestic produce cheaper in comparison, with the aim of protecting local firms from global competition. A second round will cover 284 more products at a later date.

One negative outcome for Europe, Herrero said, would be if Trump can push the Chinese into a trade agreement aimed at reducing the US trade deficit.

To the Trump administration, Sinovel's predatory practices are hardly isolated.

U.S. tariffs of 25 percent apply to 818 Chinese imports worth $34 billion. Beijing's retaliation will follow promptly. The company said in a Securities and Exchange commission filing that the tariffs "would have an immediate and lasting detrimental impact to its business in the region".

"There are no winners in a trade war, and the trend is pointing in the wrong direction", Steen Jakobsen, chief economist at Saxo Bank, said.

Still, the Trump administration sees the negative impacts as short-term "hiccups" on the path to more permanent solutions.

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