Published: Wed, June 20, 2018
Business | By Pearl Harrison

Trump escalates China trade war with extra tariffs

Trump escalates China trade war with extra tariffs

"The fundamental reality is that talk is cheap", Navarro told reporters on a conference call, again accusing China of "predatory" trade policies.

The new tensions between the world's two largest economies come as Trump, pursuing his "America First" agenda, also wages trade offensives against the European Union, Canada and Mexico among others. By most accounts, Beijing has made a routine practice of stealing American intellectual property - as part of its broader "Made in China 2025" project, which aims to position China as a dominant force in the high-tech industries of the future.

"China doesn't want a trade war", China's foreign ministry spokesperson Lu Kang said Friday in a statement. "China's government will step up an already intensive effort to determine whether Trump has the political strength to carry out his threats, while working to maximize pressure on United States interests to force him to back down and accept a compromise".

Global stocks tanked overnight, with shares in China taking the biggest hit. Shanghai stocks plunged to two-year lows. As of 8:25 p.m. ET, S&P 500 futures were down just over 0.5% and Nasdaq futures were off just over 0.65%. And more than $2.5 billion in US solar projects have been scrapped thanks to the tariffs, according to a Reuters analysis.

According to a report in Monday's New York Times, in the midst of the escalating trade war rhetoric between the USA and China, Apple CEO Tim Cook has allegedly been given a promise from the Trump administration that the Apple iPhone, assembled in China, will not be slapped with any tariffs for its trip across the us border.

China's Ministry of Commerce has called the move "blackmail", warning, "If the USA loses its senses and publishes a new list, China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back". "The trade relationship between the United States and China must be much more equitable", Trump said.

In a statement issued by the White House press office on Monday, Trump said, "I have an excellent relationship with President Xi, and we will continue working together on many issues".

Benchmark U.S. crude was down $1 to $64.85 per barrel in electronic trading on the New York Mercantile Exchange.

Beijing immediately retaliated, matching the USA levy. Also, the United States imports a lot of finished products from China from salmon, cod and pollock raw material it has exported. "The problem is, such a tactic is unlikely to work with China", said Kota Hirayama, senior emerging markets economist at SMBC Nikko Securities in Tokyo.

Some companies have reported Beijing is meeting with Chinese businesses to discuss shifting contracts for usa goods and services to suppliers from Europe or Japan, or to local Chinese firms, Parker said. Chinese stocks recorded their steepest falls since the trade dispute started on Tuesday.

Traders are moving into the safety of the US dollar and US Treasurys.

In turn, China says their new import taxes are in response to an earlier set of tariffs by the U.S., also of $34 billion at a 25 percent rate.

Late on Monday, Mr Trump added that new tariffs would "go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced". The risk of contagion comes from financial markets, they believe, as sharp selloffs could hit consumer and business confidence.

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