China retaliates as trade war starts

Randal Sanchez
July 7, 2018

As the day dawned across the USA on Friday, a new economic reality dawned with it: The tariffs long threatened against billions of dollars in Chinese goods took effect just at midnight ET while many Americans were sleeping - but Beijing was ready immediately with a wake-up call of its own.

USA officials and business owners have warned Trump that the tariffs will be a major hit to American companies.

However, while no details have been provided as yet, it looks like a Chinese retaliation may be in the works.

The Washington Post reported on Wednesday that USA companies had already felt Beijing's sting "in the form of stalled product approvals, worker visas and licensing applications".

Beijing has vowed to immediately respond with an equal amount of tariffs of its own against USA autos, agricultural and other products, but it was unclear how swiftly the actions could escalate into an all-out trade war.

The big question is how far the hostilities between Washington and Beijing will go.

China's foreign trade was expected to continue on a stable path in the second half of the year, he said, although investors fear a full-blown China-US trade war would deal a body blow to Chinese exports and its economy.

"If the USA implements tariffs, they will actually be adding tariffs on companies from all countries, including Chinese and US companies", Gao said. Bank of America estimated in its report that just over $100 billion worth of goods had been targeted, or about 4.2% of total goods imports.

"In a gaggle aboard Air Force One Thursday, Trump all but confirmed that he was following through with his threats, ticking through the additional tariffs he planned to levy after the initial salvo kicked in: ". "So we have 50 plus 200 plus nearly 300".

Faced with President Donald Trump's threat to target USA imports of cars from Europe, German and French government officials plan to meet next week in Paris to coordinate strategy.

That would bring the total of targeted Chinese goods to potentially $550 billion - more than the $506 billion in goods that China actually shipped to the United States previous year. These tactics include cyber-theft as well as requiring American companies to hand over technology in exchange for access to China's market.

Heat warning still in effect but the end is in sight
While coastal areas can expect cooler conditions, overnight lows will struggle to fall between 18 or 19 C degrees. In response to the extended heat warning, the city has opened a number of cooling centres around Toronto.

Ford Motor Co said on Thursday that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.

Speaking at a weekly news conference, Chinese Ministry of Commerce spokesman Gao Feng (高峰) said that the proposed USA tariffs would hit worldwide supply chains, including foreign companies in the world's second-largest economy.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying USA coal heading for China was on Wednesday diverted to Singapore.

"China is a big market for us".

The American Chamber of Commerce in China appealed to both sides to negotiate.

The change means China won't begin levying U.S. exports before Friday afternoon, Beijing time.

Trump has become increasingly aggressive in how he handles internatoinal trade deals and is now on the verge of a trade war, with multiple countries threatening to hit back against proposed tariffs.

For the time being, analysts say it's hard to see Washington or Beijing backing down in the dispute.

"China will never fire the first shot", Gao said.

Trump has railed against Beijing for intellectual property theft and barriers to entry for United States businesses and a $375 billion U.S. trade deficit with China. Others say they are turning their focus to Chinese consumers.

"For soybean producers like me this is a direct financial hit", Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade.

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