China: Tit-for-tat tariffs will ‘destroy’ US-China trade

Broker takes order beside her colleague during afternoon trading at a brokerage in Hong Kong

China: Tit-for-tat tariffs will ‘destroy’ US-China trade

"Rather than address our legitimate concerns, China has begun to retaliate against United States products", Lighthizer said in a statement.

"The retaliatory options available to China include boycotting American goods, sharply devaluing the yuan, and selling off U.S. Treasury holdings", Xiao Minjie, senior economist at SMBC Nikko Securities in Tokyo, wrote in a note.

The spiralling conflict over Chinese technology policy threatens to chill global economic growth.

The Retail Industry Leaders Association said new tariffs on Chinese imports would punish American families by driving up prices.

On Tuesday, the Office of the US Trade Representative proposed implementing 10 percent tariffs on a whopping 6,031 types of Chinese goods, including a range of food products and consumer electronics. That came four days after Washington added 25 per cent duties on US$34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further. "In order to safeguard the core interests of the country and the people, China will have to fight back as usual".

The list is subject to two months of finalization and input before possible implementation by President Donald Trump.

Stephen Holmes, a spokesman for the Home Depot, said some of the products on the list - like lumber and carpet - won't affect his company because it receives most of those from the US and Canada.

By expanding the list, the administration is beginning to hit products that US households buy, including such things as electric lamps and fish sticks.

Opponents have been quick to voice their dissent with Trump's decision to escalate the already white-hot trade dispute between the United States and China.

The Chinese commerce ministry has slammed the USA plan to impose tariffs on additional imports worth some $200 billion as totally unacceptable, promising a mirror response to defend its national interests.

ANALYST'S TAKE: "Given the magnitude and breadth of the tariff list, the impact is expected to ripple through supply chains and cause collateral damage on regional economies", Zhu Huani of Mizuho Bank said in a commentary.

Instead, its heavily regulated economy gives Beijing tools to disrupt operations for American companies. Regulators can deny or cancel licences or tie up companies by launching tax, environmental or anti-monopoly investigations.

And Beijing is still holding up at least one major takeover involving foreign companies - US chipmaker Qualcomm Inc's deal to buy Netherlands-based NXP Semiconductors NV.

For Qualcomm, an acquisition deal that was reportedly approved by Chinese authorities earlier this year might be in jeopardy, as Bloomberg noted today.

China's assistant commerce minister Li Chenggang said earlier on Wednesday that the latest proposed tariffs harms the World Trade Organisation (WTO) system and hurts globalisation.

The action was announced by U.S. Trade Representative Robert Lighthizer on behalf of President Trump.

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said. There is no victor in a trade war.

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent.

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