Published: Mon, July 09, 2018
Markets | By Erika Turner

China trade war breaks out as tariffs kick in

China trade war breaks out as tariffs kick in

Trump has declared trade wars as "easy to win" and bet the skirmish will prompt American companies to return operations to the US.

The Chinese Foreign Ministry said "retaliatory tariffs" also took effect, but provided no other details.

Speaking hours after the tit-for-tat duties went into effect, Chinese Premier Li Keqiang said no one would emerge a victor from a trade war. Tracy Grondine, a spokesperson for the US Apple Association, said China is a market that has "significant growth potential" for US-based apple farmers. On Thursday, Trump warned that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China past year.

But it is wrong for Trump to disregard the spirit of free trade that has buttressed the global economy since World War II.

There was confusion about exactly what United States products would be hit in the initial wave of tariffs as China's Commerce Ministry had not published an updated list.

Chinese President Xi Jinping (left) and US President Donald Trump in Florida past year. "So we have 50 plus 200 plus nearly 300", he said.

President Donald Trump has threatened to extend tariffs to $US200 billion of Chinese imports (the U.S. imports around $US500 billion in goods from China each year). The 28-nation European Union political bloc is the U.S.'s biggest trading partner, representing more than $1.1 trillion in goods and services in 2016, according to the Office of the United States Trade Representative. Surprisingly, the people taking the brunt of the economic hit still largely agree with him, NBC News reports, but how long will that last?

Despite three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump chose to go ahead with the tariffs. It is also diversifying imports away from America. U.S. tariffs on steel and aluminum imports have provoked retaliatory measures against billions of dollars of American exports.

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What is President Trump threatening?

Officials in both Beijing and Washington were ready for an extended battle, possibly lasting into 2019, experts warned.

The Trump administration is confronting China over tactics it says include stealing technology and pressuring foreign companies to hand it over as the price of admission to China's vast market.

The implementing tariffs in response to China's unfair business practices related to the forced transfer of American technology and intellectual property, the Central Bank said, adding that this action has devalued major Asian currencies, heightened market volatility and could drag other economies into a broader trade dispute. I've seen two hardliners struggle over a podium, vying for a chance to broadcast Trump's harsh message on economic issues, while the holdovers sit quietly at the side of the room.

"One client believes the prices will inevitably hiked, which will lead to the fall of consumption demand, while the other also considers cutting the types of products on the market", according to Wu Tianwen, chairman of the company.

"Our view is that trade war is never a solution", Chinese Premier Li Keqiang told reporters during a trip to Bulgaria. "At that point, the USA will be more interested in negotiations, and the Chinese side will also want to come to the table".

The LSU Ag Center expects South America, particularly Brazil, to capture the majority of the market-share of US soybean exports into China.

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