Showdown with China becomes trade war

China that would be subject to a 25 percent tariff starting on July 6, including cars, the latest hardline stance on trade by a US president who has already been wrangling with allies.

China’s Commerce Ministry said it would respond with tariffs “of the same scale and strength” and that any previous trade deals with Trump were “invalid.” The official Xinhua news agency said China would impose 25 percent tariffs on 659 US products, ranging from soybeans and cars to seafood.

China’s retaliation list was increased more than six-fold from a version released in April, but the value was kept at $50bn, as some high-value items such as commercial aircraft were deleted.

Shares of Boeing, the single largest US exporter to China, closed down 1.3 percent after paring earlier losses. Caterpillar, another big exporter to China, ended 2 percent lower.

Trump said that the US would pursue additional tariffs if China retaliates.

Washington and Beijing appeared increasingly headed toward open trade conflict after several rounds of negotiations failed to resolve US complaints over Chinese industrial policies, lack of market access in China and a $375bn US trade deficit.

“These tariffs are essential to prevent further unfair transfers of American technology and intellectual property to China, which will protect American jobs,” Trump said.

Analysts, however, did not expect the US tariffs to inflict a major wound to China’s economy and said the trade dispute likely would continue to fester.

US Customs and Border Protection will begin collecting tariffs on 818 product categories valued at $34bn on July 6, the US Trade Representative’s office said.

The list was slimmed down from a version unveiled in April, dropping Chinese flatpanel television sets, medical breathing devices and oxygen generators and air conditioning parts.

The tariffs will still target cars, including those imported by General Motors and Volvo, owned by China’s Geely Automobile Holdings, and electric cars.

And US Trade Representatives added tariffs on another 284 product lines, valued at $16 billion. – Reuters