Latest US-China trade spat hits US stocks

Soybean prices have fallen dramatically in recent weeks.
Daniel Acker  Bloomberg

Soybean prices have fallen dramatically in recent weeks. Daniel Acker Bloomberg

"Unilateral actions that alienate long-standing US allies and close off the USA market to the rest of the world are not a recipe for economic growth and prosperity and are very unlikely to change China's unfair practices", ACC said. While earlier tariffs were expected to have only a limited impact, economists warn a full-blow trade war could derail the strongest economic upswing in years.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay.

That intensification of the trade skirmish, which is now being upgraded to a full-scale trade war by some commentators, has investors spooked about the future of the global world order, and the global economy, pushing stock markets around the world deep into the red.

The United States and China launched what Beijing called the "biggest trade war in economic history" Friday, July 6, imposing tariffs on billions of dollars of each other's goods amid a spiraling dispute over technology.

Washington on Tuesday announced it was starting the process to slap 10 per cent tariffs on another United States dollars 200 billion in Chinese export goods as soon as September.

'We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy'.

The new list-targeted at China's key manufacturing export industries-contains over 6,000 products, including fruits, vegetables, live eels, feathers and beaver heads as well as hi-tech minerals that the USA needs.

Officials later issued a list of thousands of Chinese products the White House wants to hit with new tariffs, including hundreds of food products as well as tobacco, chemicals and coal.

The Trump administration intends to impose a ten percent duty on the products listed, Reuters reported, citing US Trade Representative Robert Lighthizer.

The move comes only days after the USA imposed $34 billion worth of tariffs on goods imported from Beijing.

Li said the only correct choice for China-US relations was cooperation, and that China's determination to improve the domestic business environment and its support for the multilateral trading system will not change. President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States. That means China's imports of U.S. goods are so small that Beijing "cannot match fresh U.S. tariffs", said Vishnu Varathan of Mizuho Bank in a report. That's why Trump can slap tariffs on them just because he feels like it.

USTR will hold hearings in late August on the list of targeted products, and an administration official said it would take about two months to finalize, at which point Trump would decide whether to go ahead with the tariffs. They are meant to put pressure on China to stop stealing USA companies' trade secrets and forcing them to hand over intellectual property to Chinese firms as a condition of doing business there.

"None of this has produced a dramatic change in other countries and has yielded further retaliation", Mr. Holleyman wrote in an e-mail.

"Tariffs are taxes, plain and simple".

Last Friday, the USA imposed 25% tariffs on Chinese imports worth $34bn (£25bn).

Pence cited several exporting opportunities that he said have improved during the Trump administration, including beef to China and poultry to South Korea.

Australia's dollar, often seen as a proxy for China's economic fortunes due to Australian raw materials exported there, was 0.83 percent lower.

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