US and China’s tit-for-tat taxes fuel trade war

THE US and China yesterday officially started what Beijing called the ‘largest trade war in economic history’ as they imposed harsh new tariffs on each other’s exports.

As the world’s two biggest economies slapped tit-fortat duties on products each worth nearly £26billion, Donald Trump warned his 25 per cent charges on 800 Chinese products could be only the start.

He warned that the US may ultimately target all £377billion of goods imported annually from China as experts predicted the trade war could last for years.

The US President has vowed to force China to abandon unfair trading practices such as stealing intellectual property and forcing American companies to hand over valuable technology.

However, China insists that it is the victim in a dispute that has prompted fears for the global economy.

A spokesman for China’s Foreign Ministry said the US crackdown ‘will bring disaster to multinational corporations, small and medium businesses and normal consumers across the world’.

There are widespread fears that a US-China battle will damage world trade, investment and growth. Both countries insist they have no plans to back down after months of rising tension.

The new US tariffs hit a range of imports including electric vehicles and industrial machinery. China retaliated by targeting 500 US export items worth the same amount, including American cars, meat, soybeans, crude oil and even lobsters.

By principally trying to hit US farmers – one of Mr Trump’s biggest sources of support – China may be trying to sway opinion in swing states in America’s crucial mid-term elections in November.

Many US companies expect China will instead turn for products to Europe, including Britain, or Asia. Chinese president, Xi Jinping, warned last month that ‘when one door closes, another opens’.

Underlying the dispute is Mr Trump’s fury at America’s £283billion trading deficit in goods with China.

‘This is not economic Armageddon,’ said Rob Carnell, chief Asia economist at Dutch bank ING. ‘But it is applying the brakes to a global economy that has less durable momentum than appears to be the case.’