United States soybean farmers say China tariffs could result in 'serious damage'

U.S. tariffs take effect, China warns of 'counterattack'

U.S. tariffs take effect, China warns of 'counterattack'

US tariffs against Chinese imports took effect early Friday and President Donald Trump made clear Thursday that he is prepared to sharply escalate a trade war between the world's two biggest economies.

The American tariffs are the result of President Donald Trump's bid to protect United States jobs and stop "unfair transfers of American technology and intellectual property to China". American officials worry Chinese plans to create tech champions in fields including robotics, biotech and artificial intelligence will erode USA industrial leadership.

Beijing vowed to take "necessary countermeasures" after the USA imposed 25 percent duties on about $34 billion in Chinese machinery, electronics and high-tech equipment, including autos, computer hard drives and LEDs.

The total value of the U.S. tariffs on China amounts to $50bn, though they will come into effect in two tranches, with the first round covering 818 products worth about $34bn having come into force on Friday.

Lynn Rohrscheib, chairwoman of the Illinois Soybean Growers, who farms near Moweaqua, called Friday for a return to free trade and access to the Chinese market.

Market economists reckoned that every $100 billion of imports affected by tariffs would take away around 0.5 percent of global trade.

The riskiest economic gamble of Trump's presidency could spread as it enters a new and unsafe phase by imposing direct costs on companies and consumers globally. Chinese exporters have reported USA orders fell off ahead of the tariff hike.

Financial markets seemed to take the latest developments in stride.

Japan's main stock index, the Nikkei 225, gained 1.1 percent, while the Shanghai Composite Index added 0.5 percent and Hong Kong's Hang Seng rose 0.8 percent. Beijing has announced reforms this year including ending limits on foreign ownership in its auto industry, but none directly addresses complaints that are fueling its conflict with Washington.

Trump on Thursday said higher tariffs on an additional US$16 billion of Chinese goods were set to take effect in two weeks.

Washington-based think tank the Peterson Institute for International Economics (PIIE) expects United States tariffs on Chinese goods, which it says particularly target computers and electronics, to hurt multinationals more than China as well as other firms in Asia.

Judging by the retaliatory tariffs targeted at the range of USA agricultural goods so far, China also seemed to be avoiding an escalation in trade tensions, analysts said.

Trump alleges that China uses foreign ownership restrictions, administrative review, and licensing processes to force or pressure technology transfers from American companies. It accused the US of igniting "the biggest trade war in economic history".

Economists say that if the back-and-forth stops there, the overall impact on both economies will be minimal even though some industries will suffer.

"There should be no doubting Beijing's resolve", the China Daily said.

Under a full-blown trade war in which the United States slaps 10% tariffs on all other countries and they respond, the economists reckon USA growth would slow by 0.8 percentage point by 2020.

China has also banned imports of United States agricultural products such as poultry, cutting off America's ranchers and farmers from a major market for their goods.

China has taken a softer, conciliatory approach so far, but investors only need to hark back to previous year when South Korean companies bore the brunt of a backlash from China over Seoul's deployment of a US missile system.

A member of China's central bank monetary policy committee, Ma Jun, said Friday that the first punches will have a "limited impact" on the Chinese economy.

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