US may list tariffs on $200 billion more Chinese products

Workers assembling smartphones in Guang'an Sichuan

Workers assembling smartphones in Guang'an Sichuan

Oliver Jones from Capital Economics has warned that China's response to Trump's latest tariff threat could hit the United States stock market hard.

Instead, its heavily regulated economy gives Beijing tools to disrupt operations for American automakers, restaurant chains and other companies that are looking to China to drive revenue growth.

The 10% tariffs will not kick in immediately but will undergo a two-month review process, with hearings August 20-23., according to a statement from the U.S. Trade Representative's office Tuesday.

The United States has launched what China calls the "largest trade war in economic history" and in its latest move targeted another $200 billion in Chinese export goods.

The abrupt escalation is "totally unacceptable", said a Commerce Ministry statement. It said, "the Chinese government will be forced to impose necessary countermeasures" to protect its "core interests".

The Commerce Ministry also called upon the global community to "work together to safeguard the rules of free trade and the multilateral trading system and jointly oppose trade hegemonism".

Sources in Chinese state media told Reuters that Beijing is concerned that negative coverage of the president could further inflame the trade conflict between the two countries.

The goal is to bring the total amount of Chinese imports up to 40 percent of the total imported from the Asian power, since the USA products hit by Beijing's retaliation represent that share of exports, an official told reporters in a conference call.

USA officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum. The U.S. has now listed another 170 bn euros ($200bn) worth of tariffs on more products that are due to go into force in September. Only about 1% of the items on the list were consumer goods. It left untouched US-branded smartphones and laptop computers. Some Korean exports could replace Chinese goods to be slapped with tariffs, for example.

It was even worse in Europe, with Paris, London and Frankfurt markets losing between 1.3 and 1.5 per cent each.

Last year, for example, China imported nearly four times fewer goods to the US than what it exported to America.

The US trade deficit in goods with China ballooned to a record $375.2bn past year, stoking Trump's anger. That would leave China only US$80 billion for further retaliation.

There was a price to be paid by American companies as government policies legislated winners and losers. Regulators can deny or cancel licenses or launch lengthy tax, environmental or anti-monopoly investigations.

Companies are watching USA chipmaker Qualcomm Inc., which has waited for months for Chinese regulators to decide whether to allow its proposed $44 billion acquisition of NXP Semiconductors.

The dispute comes on top of Washington's confrontation with other allies and major trading partners including Canada, Mexico and the European Union, after it imposed steep tariffs on their steel and aluminium.

The United States remains willing to engage in negotiations with China on the issues at hand, he added.

Members of Congress are increasingly questioning Trump's tactics.

Jack Gerard, Cal Dooley, and Edward R. Hamberger-the president and CEO of the American Petroleum Institute, president and CEO of the American Chemistry Council, and president and CEO of the Association of American Railroads, respectively-wrote in an opinion piece in the Washington Examiner published on Wednesday that the trade war is threatening the USA economy and could add "hundreds of billions of dollars in potential costs for American businesses - costs that could ultimately be borne by consumers".

"Trade is critical to economic growth and supports millions of jobs from Silicon Valley to the savannahs of the heartland", Dean Garfield, chief executive of the Information Technology Industry Council, says in a statement.

Envoys from the two sides last met June 3 when Commerce Secretary Wilbur Ross visited Beijing for talks with Vice Premier Liu He.

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