China vows to fight Trump’s latest tariffs as stocks take a dive
BEIJING/WASHINGTON China on Friday vowed to fight back against U.S. President Donald Trump’s abrupt decision to slap 10 per cent tariffs on the remaining US$300 billion in Chinese imports, a move that ended a month-long trade truce.
China’s new ambassador to the United Nations, Zhang Jun, said Beijing would take “necessary countermeasures” to protect its rights and bluntly described Trump’s move as “an irrational, irresponsible act.”
“China’s position is very clear that if U.S. wishes to talk, then we will talk, if they want to fight, then we will fight,” Zhang told reporters in New York, also signalling that trade tensions could hurt co-operation between the countries on dealing with North Korea.
Trump stunned financial markets on Thursday by saying he plans to levy the additional duties starting Sept. 1, marking a sudden end to a truce in a yearlong trade war between the world’s two biggest economies that has slowed global growth and disrupted supply chains.
U.S. stocks suffered the worst week of 2019 as investors fretted over the escalation of a trade war with China. The S&P 500 fell for a fifth straight day, its steepest weekly loss since December’s sell-off.
The Dow Jones Industrial Average fell 98.41 points, or 0.37 per cent, to 26,485.01, the S&P 500 lost 21.52 points, or 0.73 per cent, to 2,932.04 and the Nasdaq Composite dropped 107.05 points, or 1.32 per cent, to 8,004.07. The Toronto Stock Exchange’s S&P/TSX fell 105.38 points, or 0.64 per cent, to 16,271.66.
Earlier on Friday, Chinese Foreign Ministry spokeswoman Hua Chunying said China was holding firm to its position in the 13-month tariff brawl with the United States.
“We won’t accept any maximum pressure, intimidation or blackmail,” Hua told a news briefing in Beijing.
“On the major issues of principle we won’t give an inch,” she said, adding that China hoped the United States would “give up its illusions” and return to negotiations based on mutual respect and equality.
Retaliatory measures by China could include tariffs, a ban on the export of rare earths that are used in everything from military equipment to consumer electronics, and penalties against U.S. companies in China, according to analysts.
Trump also threatened to further raise tariffs if Chinese President Xi Jinping fails to move more quickly to strike a trade deal.
The 10 per cent duties, which Trump announced in a series of Twitter posts after his top trade negotiators briefed him on a lack of progress in talks in Shanghai this week, would extend tariffs to nearly all Chinese goods that the United States imports.
White House economic adviser
China will deliver each retaliation methodically, and deliberately, one by one.
Larry Kudlow told reporters on Friday that the impact on consumers from the latest duties would be minimal, despite the fact that the US$300 billion target list is nearly all consumer goods, from cellphones and laptop computers to toys and footwear.
“The president’s not satisfied with the progress on the trade deal,” Kudlow told Fox Business Network.
So far, Beijing has refrained from slapping tariffs on U.S. crude oil and big aircraft, after cumulatively imposing additional retaliatory tariffs of up to 25 per cent on about US$110 billion of U.S. goods since the trade war broke out last year.
China is also drafting a list of “unreliable entities” — foreign firms that have harmed Chinese interests. U.S. delivery giant Fedex is under investigation by China.
“China will deliver each retaliation methodically, and deliberately, one by one,” ING economist Iris Pang wrote in a note.
“We believe China’s strategy in this trade war escalation will be to slow down the pace of negotiation and tit-for-tat retaliation. This could lengthen the process of retaliation until the upcoming U.S. presidential election” in November 2020, Pang said.
The tariffs may also force the U.S. Federal Reserve to again cut interest rates to protect the U.S. economy from trade-policy risks, experts said.
The Fed got another possible signal for a second rate cut next month from U.S. July jobs data on Friday, which showed a slowdown in hiring and fewer hours for manufacturing workers.
But new data also showed the U.S. goods trade deficit dipped 0.3 per cent in June to US$55.2 billion in a sign that Trump’s tariff policies were restricting trade flows.