China vows retaliation for latest USA tariff threat

Canola is an “imperfect substitute” for soybeans
Mike Drew  Postmedia

Canola is an “imperfect substitute” for soybeans Mike Drew Postmedia

Trump said last week the United States may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of USA imports from China a year ago.

President Trump criticized trade agreements with other nations Wednesday morning, as he attends North Atlantic Treaty Organisation meetings.

U.S. President Donald Trump is pushing his trade conflict with China toward a point where neither side can back down. It's unclear what that action could include.

A possible second round of tariff hikes announced Tuesday by the US Trade Representative targets a US$200 billion list of Chinese goods.

World stock markets sank and the dollar rose Wednesday after Washington threatened to hammer Beijing with tariffs on a further $200 billion of Chinese imports, ratcheting up the global trade war.

He directed Lighthizer to identify $200 billion in Chinese goods for tariffs if China retaliated against United States penalties that are meant to punish the country for intellectual property theft.

Trump's latest action will hit consumer products, which were spared from the first import levies.

"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. They warned tariffs on imports raise consumer prices and expose USA farmers and manufacturers to retaliation. President Trump had warned China that if the country retaliated to those tariffs, he would impose additional ones; China did, quickly adding tariffs to more than 500 different American imports.

When he talks China, we listen.

The USTR will accept public comments and hold hearings August 20-23 before reaching a decision after August 31, according to a senior USA official who briefed reporters on condition of anonymity.

Announcing proposals for the new tariffs, US Trade Representative Robert Lighthizer said: "For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition".

Trump has said continuously that China has taken advantage of the U.S. economy, and he has vowed to hit almost all the country's products with tariffs, as much as $450bn.

However, Stockman said the big problem of trade imbalance is not a result of bad trade deals.

The move marked the latest escalation of the ongoing trade war between Washington and Beijing.

Unfortunately for markets, no end is in sight, with further retaliatory levies nearly certain to be enacted by China in the coming days or weeks.

China bought $130 billion of US goods previous year.

Although the trade war obviously remains front and centre in the minds of investors, another factor at play is the nagging worry that Trump may want to pull the U.S. out of NATO (the North Atlantic Treaty Organisation) - a move that would represent a fundamental upheaval in the global order, and have a huge impact on markets.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay.

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