China promptly fires back as Trump trade war starts

Few specifics about re­tal­i­a­tion of­fered as pres­i­dent moves to ad­dress deficit

USA TODAY Weekend Extra - - FRONT PAGE - Kim Hjelm­gaard

The Chi­nese gov­ern­ment said Fri­day it “im­me­di­ately” re­tal­i­ated against in­creased U.S. tar­iffs on Chi­nese im­ports as Pres­i­dent Don­ald Trump’s ad­min­is­tra­tion ef­fec­tively launched a trade war with its most im­por­tant trad­ing part­ner.

China’s for­eign min­istry in Bei­jing said that tit-for-tat du­ties on U.S. goods took ef­fect straight away af­ter Wash­ing­ton’s 25 per­cent tar­iff on $34 bil­lion worth of Chi­nese goods kicked in at 12:01 a.m. EDT Fri­day. The min­istry gave few other de­tails. Bei­jing had pre­vi­ously flagged that China would make a “nec­es­sary coun­ter­at­tack” if needed on a sim­i­lar amount of U.S. ex­ports, in­clud­ing soy­beans and cars. The U.S. levies mostly tar­get China’s in­dus­trial goods and some elec­tronic com­po­nents. A long list of tar­geted Chi­nese prod­ucts di­rectly pur­chased by Amer­i­cans such as TVs, prin­ters and wash­ing ma­chines was re­vised in June fol­low­ing a trade hear­ing.

“There should be no doubt­ing Bei­jing’s re­solve.”

China Daily Bei­jng’s of­fi­cial state news­pa­per

Trump is not happy with the large U.S. trade deficit with China and in­sists Bei­jing has used un­fair and preda­tory tac­tics such as re­quir­ing U.S. com­pa­nies to hand over tech­nol­ogy in ex­change for ac­cess to China’s mar­ket. China re­jects the al­le­ga­tion.

Many an­a­lysts and econ­o­mists be-

lieve the new tar­iffs are coun­ter­pro­duc­tive and will chiefly harm one par­tic­u­lar seg­ment of so­ci­ety: con­sumers.

“The de­ci­sion to im­pose tar­iffs on Chi­nese goods will harm Amer­i­can con­sumers and busi­nesses with­out ad­dress­ing dis­crim­i­na­tory and sys­temic Chi­nese trade prac­tices and poli­cies,” said Josh Kallmer, ex­ec­u­tive vice pres­i­dent for pol­icy at the In­for­ma­tion Tech­nol­ogy In­dus­try Coun­cil, a trade as­so­ci­a­tion for the com­mu­ni­ca­tions tech­nol­ogy in­dus­try. “It is trou­bling that the (Trump ad­min­is­tra­tion) con­tin­ues to as­sume that the im­po­si­tion of tar­iffs will con­vince China to re­solve com­plex trade is­sues and ir­re­spon­si­ble to down­play the im­pact on Amer­i­can work­ers and busi­nesses,” he said.

Maarten-Jan Bakkum, a strate­gist at NN In­vest­ment Part­ners, a Nether­lands-based as­set man­ager, said in an email that “pro­tec­tion­ist mea­sures by one coun­try could po­ten­tially spi­ral out of con­trol, lead­ing to more re­tal­i­a­tion by more coun­tries, even­tu­ally af­fect­ing a big­ger share of Chi­nese (emerg­ing mar­ket) and global ex­ports.”

The United States had a record $375 bil­lion trade deficit with China in 2017, ac­cord­ing to Bloomberg data. Bei­jing is Wash­ing­ton’s largest sin­gle-coun­try trad­ing part­ner, fol­lowed by Canada and Mex­ico. The 28-na­tion Euro­pean Union po­lit­i­cal bloc is the U.S.’s big­gest trad­ing part­ner, rep­re­sent­ing more than $1.1 tril­lion in goods and ser­vices in 2016, ac­cord­ing to the Of­fice of the United States Trade Rep­re­sen­ta­tive.

Trump has al­ready com­pli­cated re­la­tions with al­lies by rais­ing im­port du­ties on steel, alu­minum and au­tos from Europe, Canada, Mex­ico and Ja­pan.

Bei­jng’s of­fi­cial state news­pa­per China Daily ac­cused the Trump ad­min­is­tra­tion of “be­hav­ing like a gang of hood­lums” for in­creas­ing the tar­iffs and said the White House risked dam­ag­ing the global econ­omy.

“There should be no doubt­ing Bei­jing’s re­solve,” the news­pa­per said.

China’s min­istry of com­merce said Trump had started “the largest trade war in history.”

The White House has not yet com­mented on China’s re­tal­ia­tory mea­sures, although Wil­liam Zarit, chair­man of the Amer­i­can Chamber of Com­merce in China, ap­pealed in a state­ment to both sides to ne­go­ti­ate a set­tle­ment.

Fi­nan­cial markets in Asia fell sharply be­fore eras­ing some of those early losses as in­vestors re­sponded with calm. The Dow Jones In­dus­trial Av­er­age and S&P 500 closed higher Fri­day.

“The mar­ket is act­ing very calmly,” Fran­cis Lun, chief ex­ec­u­tive of GEO Se­cu­ri­ties Ltd. in Hong Kong, told The As­so­ci­ated Press. “But of course, the talk of a trade war al­ready de­pressed the mar­ket for about 1,000 points in the past month.”

AP

A Chi­nese in­vestor lis­tens to a news re­port on his smart­phone as he mon­i­tors stock prices at a bro­ker­age house Fri­day in Bei­jing.

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