US draws China into a trade war

President Donald Trump has imposed tariffs on Chinese imports worth $60 billion in his strongest trade action against a country he describes as an ‘economic enemy.’

Beijing immediately threatened Washington with higher tariffs on $3 billion worth of imported US products. It also warned the US to 'pause on the brink of a precipice.' ‘‘China will not sit idle watching its legitimate rights and interests being damaged under any circumstance. We are fully prepared to firmly defend our interests," a commerce ministerial spokesperson said.

The measures are Trump’s strongest trade action yet against a country that he says is responsible for thousands of lost American jobs and billions in lost revenues. Financial markets immediately plunged on fears of a potential trade war between the world's two largest economies.

The White House said it was taking action in retaliation for China's use of pressure and intimidation to obtain American technology and trade secrets. The measures included a significant change in Trump's looming steel and aluminium tariffs that would be aimed primarily at China.

After Trump's announcement, China's Commerce Ministry said it was proposing tariffs on 128 US products, including pork, wine and seamless steel tubes. But it also urged the Trump administration to resolve differences through dialogue to "avoid damage to the broader picture of Chinese-US cooperation". The president’s actions fulfil his campaign pledge to demand fairer trade deals with nations around

the globe and to retaliate against trading partners if the United States does not secure better agreements.

Rather than trying to draw China into the rules-based international economic order — a policy that dates back to Richard M. Nixon and Henry A. Kissinger — the United States now regards China as a strategic competitor, bent on eroding American security and prosperity.

The White House — along with many in the business community — believes the United States needs to strike back against China’s exploitation of its intellectual property, even if many question whether tariffs are the best tactic.

Trump said that he respected China’s president, Xi Jinping, and that China had been helpful in pressuring North Korea over its nuclear and missile programs. But the president declared that the United States would no longer tolerate running a trade deficit of nearly $400 billion with China, its second-largest trading partner, after the European Union.

"We're doing things for this country that should have been done for many, many years... It's going to make us a much stronger, much richer nation," he said at the White House.In addition to the tariffs, the US also plans to impose new investment restrictions and take action against China at the World Trade Organisation.

The US administration's increasing focus on punishing China was evident in its decision to exempt allies like the EU, South Korea, Brazil, Canada and Mexico from what were supposed to be worldwide Stock markets were hit by fears that Trump's tariff plan could trigger a trade war. Japan's Nikkei share index fell 4.5 per cent and in the US the Dow Jones sank 2.9 per cent. China's Shanghai Composite Index closed down 3.4 per cent while Hong Kong's Hang Seng index ended 2.5 per cent lower.