China-US trade war shifts gear

US TO PUT 10% TARIFF ON CHINESE GOODS Beijing warns it will reciprocate and US firms in China expect backlash.

US President Donald Trump has threatened to impose a 10% tariff on $200 billion (R2.7 trillion) of Chinese goods and Beijing warned it would retaliate, in a rapid escalation of the trade conflict between the world’s two biggest economies.

Trump’s latest move, as Washington fights trade battles on several fronts, was unexpectedly swift and sharp. It was retaliation, he said, for China’s decision to raise tariffs on $50 billion in US goods after Trump announced similar tariffs on Chinese goods on Friday.

“After the legal process is complete, these tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said on Monday.

The comments sent global stock markets skidding and weakened both the dollar and the Chinese yuan yesterday.

China’s commerce ministry said Beijing will fight back with “qualitative” and “quantitative” measures if the US publishes an additional list of tariffs on Chinese goods. “The US has initiated a trade war and violated market regulations and is harming the interests of not just the people of China and the US, but of the world.”

US business groups said they were bracing for a backlash from the Chinese government against all American firms in China. Jacob Parker, vice-president of China operations at the US-China Business Council in Beijing, said China would undoubtedly “begin looking at other ways to enforce action against US companies that are operating in the market”.

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for US goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said.

Washington and Beijing had been heading towards open trade conflict after several rounds of talks failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375 billion US trade deficit.

US Trade Representative Robert Lighthizer said his office was preparing the tariffs for a legal process. He did not say when the new target list would be unveiled.

“As China hawks, like Lighthizer and (Peter) Navarro, appear to have gained power within the Trump administration lately, an all-out trade war now seems more inevitable,” said Yasunari Ueno, chief market analyst at Mizuho Securities in Japan. –