Fears mount as China plans tariffs

U.S. stocks rally after global markets fall

WASHINGTON — An escalating trade dispute between the world’s two biggest economies heightened fears Wednesday of a global trade war, sent a jolt to global stock markets but also left the door open to a negotiated settlement that might prevent any serious damage before it begins.

The Dow Jones industrial average initially tumbled after markets fell in Europe and Asia on worries of an intensifying trade conflict between the United States and China. But then stocks rallied and finished higher Wednesday as investors bet that the back-andforth tariff threats won’t blossom into a bigger dispute that damages global commerce.

After the United States unveiled plans to impose tariffs on $50 billion in Chinese imports Tuesday, China lashed back within hours, matching the American tariffs with plans to tax $50 billion of U.S. products, including soybeans and small aircraft.

The tariffs wouldn’t kick in right away. The U.S. government is

inviting public comment on its trade sanctions through May 11 and will hold a hearing on the plan May 15. And China set no date for its 25 percent duties to take effect, saying it is waiting to see what President Donald Trump does.

U.S. Commerce Secretary Wilbur Ross brushed off concern about a trade war. In an interview with CNBC on Wednesday morning, Mr. Ross said the tariffs announced by China amount to a mere 0.3 percent of America’s gross domestic product. He added that some U.S. punitive action against Beijing has been “coming for a while” over what the United States calls China’s predatory behavior involving technology.

“What we’re talking about on both sides is a fraction of 1 percent of both economies,” Mr. Ross said.

The larger concern, the commerce secretary said, is the protection of U.S. intellectual property.

Asked whether the U.S. tariffs against China were a negotiating ploy, Lawrence Kudlow, Mr. Trump’s top economic adviser, said: “Potentially. It’s part of the process. I would take the president seriously on this tariff issue. There are carrots and sticks in life . ... Both sides benefit by positive solutions that lower barriers.”

The clash reflects the tension between Mr. Trump’s promises to narrow a U.S. trade deficit with China that stood at $375.2 billion in goods last year and the ruling Communist Party’s development ambitions. Regulators use access to China’s vast market as leverage to press foreign automakers and other companies to help create or improve industries and technology.

In a tweet Wednesday after China’s announcement, Mr. Trump said: “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”

A list the U.S. issued Tuesday of products subject to tariff hikes included aerospace, telecoms and machinery, striking at high-tech industries seen by China’s leaders as the key to its economic future.

China said it would immediately challenge the U.S. move in the World Trade Organization. A deputy finance minister, Zhu Guangyao, appealed to Washington to “work in a constructive manner” and avoid hurting both countries but warned against expecting Beijing to back down.

Companies and economists have expressed concern that global economic activity might sputter if other governments are prompted to raise their own import barriers.

China announced tariffs worth $50 billion on a series of U.S. products including soybeans, whiskey and cars. Chinese officials said they were obliged to act after the U.S. announced plans for tariffs in an escalating dispute over China’s technology program and other trade issues.

American companies have long chafed under Chinese regulations that require them to operate through local partners and share technology with potential competitors in exchange for market access. Business groups say companies feel unwelcome in China’s state-dominated economy and are being squeezed out of promising industries.