Published: Sat, July 07, 2018
Finance | By Cynthia Curry

'Gang of Hoodlums' - Words Fly As U.S.-China Trade War Begins

'Gang of Hoodlums' - Words Fly As U.S.-China Trade War Begins

Chinese Commerce Ministry spokesman Gao Feng said that the proposed USA tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.

While the Trump administration has tailored its tariffs to target certain Chinese goods that will not directly affect many American consumers, products including machinery and engine parts, China's tariffs squarely target industries vital to Trump's base, according to the Associated Press.

China has said it would not "fire the first shot", but the Chinese General Administration of Customs yesterday made it clear that Chinese tariffs on U.S. goods would take effect immediately after United States duties on Chinese goods kick in.

There was no evidence of any last-minute negotiations between US and Chinese officials, business sources in Washington and Beijing said.

The Commerce Ministry statement didn't provide details on its retaliation.

The US penalties became a reality at just after midnight in Washington, which in Beijing was just past noon (July 6).

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

USA tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday, with Beijing saying it had no choice but to respond in kind, as the two trading giants escalated a bitter row.

It said the United States had violated World Trade Organization rules by imposing the tariffs, and indicated China would raise the issue with the regulatory body in time. At the same time, Beijing has reiterated it will roll out tit-for-tat tariffs as tensions rapidly escalate.

The Trump administration's first round of duties hits major Chinese technology products, and another round of tariffs on $16 billion worth of goods is set to go into effect as soon as August. "So we have 50 plus 200 plus nearly 300".

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A 25% tariff is now being applied to $US34 billion worth of Chinese goods entering the United States.

Shaun Rein, managing director at the China Market Research Group in Shanghai, said the Chinese government's next play could be to stoke anti-American sentiments among consumers - similar to the boycotts it ordered previous year on South Korea's Lotte Group, which caused dozens of the company's convenience stores to shutter.

"There is a lot of negative sentiment driven by trade that could easily change should the situation not get any worse", said Kerry Craig, global market strategist at JPMorgan Asset Management in Melbourne. "Simply put, the U.S. is opening fire on the whole world, and also firing at itself".

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

The American Chamber of Commerce in China appealed to both sides to negotiate. The yuan, which has weakened sharply against a broadly strong us dollar in recent weeks, was trading at 6.6480 per dollar as of 4:30 p.m.

Wall Street gained on the back of a stronger-than-forecast employment report which helped U.S. stocks recover from an early bout of weakness as midday approached in NY. 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.

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

China said Wednesday that it would not fire the first shot in its continuing trade battle with the United States.

Economists have for months warned of the potential damage to the U.S. and global economies from aggressive trade policies and protectionism, which would raise prices and upend global supply chains.

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