USA tariffs take effect, China warns of 'counterattack'

A US flag is seen during a welcoming ceremony in Beijing China

USA tariffs take effect, China warns of 'counterattack'

On Friday morning, the Trump administration followed through with a promise to impose tariffs on $34 billion worth of Chinese products, launching a trade war between the world's two largest economies.

After months of rhetoric, a 25 percent levy on $34 billion of Chinese goods entering the USA took effect just after midnight Washington time on Friday with farming plows and airplane parts among the products targeted.

Soybeans are on the hit list of American goods now being targeted by Chinese tariffs that went into effect Friday after the US implemented a raft of duties earlier in the day and President Donald Trump threatened more action.

Similarly, China is placing 25% tariffs on a host of goods including crude oil and soybeans. "And these trade tariff issues-the final outcome is yet to be determined", Moore said.

China was expected to respond dollar-for-dollar but did not immediately release details of the countermeasures, which were expected mainly to target agricultural products in a bid to hurt supporters of US President Donald Trump.

The trade war may have just started, but China has already been making moves in the soybean world as USA shipments originally destined for the nation have been canceled or rerouted.

"China would never start a trade war but if any party resorts to an increase of tariffs then China will take measures in response to protect development interests".

Mark Williams, chief Asia economist at Capital Economics, said Beijing could arrange a "propaganda campaign, which allows officials to remain at arm's length from the resulting disruption to sales". Bloomberg Economics' base case remains more trade skirmish than trade war, but the risks are increasing.

In the past, the US used its clout to win trade skirmishes with developing countries, said James Boughton, a senior fellow at the Centre for International Governance Innovation in Waterloo, Ontario.

The imposition of the tariffs had little impact on Asian stock markets. Trump's attempt to use the steel and aluminum tariffs to pry concessions from the Mexicans and Canadians proved futile.

Beijing had earlier released a target list of $34bn worth of imported U.S. goods including autos and agricultural products also faced 25 percent tariffs.

China is the world's largest importer of soy. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey. The effectively requiring Chinese leaders to abandon or scale back a high-tech push that they consider vital to their country's future.

China's exports to the United States increased by 5.4 percent in the first half, 13.9 percentage points slower than the same period a year ago, customs data showed. There did not appear to be any direct instructions to hold up cargoes, but some customs departments were waiting for official guidance on imposing added tariffs, the sources said.

Accusing China of conducting "unfair" trade practices, Trump has pledged to protect USA intellectual property, stop noneconomic transfers of industrially significant technology and intellectual property to China, and increase access to the Chinese market for American products.

Trump may suddenly find China less accommodating on this explosive dossier if the trade war expands.

Mr Trump said: "You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. OK?" The EU has said it will impose its own tariffs of about $US300 billion on USA imports if he follows through.

While Bank of America Merrill Lynch analysts said the chances of the trade war escalating were "modest", it couldn't rule out "a full-blown, recession-inducing 'trade war'".

The state-run China Daily accused the Trump administration of "behaving like a gang of hoodlums", saying that they would damage the global economy unless other countries stop them.

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