Trade War Heats Up
Albanian Daily News
Published July 6, 2018
The United States and China slapped tit-for-tat duties on $34 billion worth of each other's imports on Friday, with Beijing accusing Washington of triggering the "largest-scale trade war" as the world's two biggest economies sharply escalated their conflict.
Hours before Washington's deadline for the tariffs to take effect, U.S. President Donald Trump upped the ante on its largest trading partner, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year.
China's commerce ministry, in a statement shortly after the U.S. deadline passed at 0401 GMT on Friday, said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans, and lobsters also faced 25 percent tariffs.
Some of Trump's fellow Republicans in the U.S. Congress lashed out at his actions.
"Tariffs not only hurt our farmers, ranchers and airplane manufacturers, but they also harm every American consumer. We should be working with our allies to isolate China rather than escalate a trade war," said Senator Jerry Moran, who represents the agriculture-heavy state of Kansas.
China's soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.
"We can probably say that the trade war has officially started," said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University's Antai College of Economics and Management.
"If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said, then it's going to have a big impact for both countries."
U.S. relations with other major trading partners also have been tense following the Trump administration's decision earlier this year to slap tariffs on imported steel and aluminum, including from the European Union. Meanwhile, Washington is attempting to renegotiate the 24-year-old North American Free Trade Agreement with Canada and Mexico.
Friday's long-expected China tariff volley fueled fear that a prolonged and escalating battle would hurt global trade, investment and growth, while also damaging U.S. farmers who stand to lose revenues and potentially driving up food prices in China.
"Trade war is never a solution," Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and eastern European countries.
"China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests."
In the run-up to Friday, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.
"Our baseline forecast assumes only a modest further escalation in the trade 'war' this summer," Bank of America Merrill Lynch said in a Friday note. "However, we can't rule out a full-blown, recession-inducing 'trade war'," it said.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks.
Chinese shares, battered in the run-up to the tariff deadline, reversed earlier losses to close higher, but the yuan remained weaker against the dollar. Asian equities wobbled but also managed to end up.
China lodged a case with the World Trade Organisation (WTO) against the United States, its commerce ministry said in a one-line statement late on Friday.
White House Council of Economic Advisers Chairman Kevin Hassett, in an interview on Fox Business Network on Friday, said Trump is "going to deliver better (trade) deals." He added that for now, "He's called the bluff of other countries that have basically been abusing ... our workers for a long time."