China vows retaliation for latest USA tariff threat

Beijing

A woman transports goods past workers sleeping on a street-side in Beijing on Tuesday

Tit-for-tat tariffs already are raising the cost of some goods, such as washing machines, while industry groups warn of potential price hikes for cars, electronics and other items.

He said: "Chinese equities were amongst the worst performers today, with the Shanghai Composite dropping 1.8% after the US Trade Representative set out the $200bn of Chinese imports on which it intends to impose a 10% tariff".

China hit back with its own levies - targeting U.S. products such as mixed nuts and whiskey. Accordingly, the Trade Representative is proposing to modify the action in this investigation by maintaining the original $34 billion action and the proposed $16 billion action, and by taking a further, supplemental action"-the additional 10% ad valorem on $200 billion worth of Chinese goods now proposed".

'Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families, ' trade lawyer Scott Lincicome said. "China has no option but to fight fire with fire".

The US Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but it has been critical of Trump's aggressive tariff policies. Now China is its sixth largest export market, according to Grondine.

But Trump, for his part, showed no sign of reconciling with China.

"I am curious to see what China does to retaliate in the coming days".

The fallout has been acutely felt by soybean producers and other agricultural sectors in the Midwest - prompting even some members of Trump's own party to voice alarm. But it would definitely mess with America in the short term. But Beijing could fight back with other measures to make life hard for American companies doing business in China. Remember, this is a heavily state-run, communist-capitalist hybrid economy, and the government imposes all sorts of limits and regulations on the American companies - think Walmart and General Motors - that operate there.

Beijing has said it would hit back against Washington's escalating tariff measures, including through "qualitative measures", a threat that USA businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

The proportion of companies expecting to be profitable was basically flat, at about 77 percent, but firms signalled they were pulling back slightly on investment.

But we don't actually need China (or anyone else) to buy our debt.

Concern about preferential treatment for Chinese firms and pressure for US technology transfers is "stoking demand for reciprocity in the U.S". "It's up to them to open the door again". Rising rates would curb inflation and increase the value of the dollar.

China bought $130 billion of US goods previous year. Tighter monetary policy also would boost the value of the dollar and dent USA exports - another hit to growth. It would actually give Trump what he wants! China could also try to force its currency lower to gain competitiveness.

"Tariffs are taxes, plain and simple". They're the ones buying the exports, after all. "So, now he's fighting two wars and that's a bit complicated", Tal said. "How long can we hold out until my opponent changes its strategy?"

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