Published: Sun, July 15, 2018
Finance | By Cynthia Curry

China vows 'firm and forceful measures' for $200 billion US tariff threat

China vows 'firm and forceful measures' for $200 billion US tariff threat

China imported only $130 billion in goods from the United States a year ago, but it could retaliate through other means, including regulatory moves and investigations of USA companies. The Chinese government said the USA move was "totally unacceptable" and it is highly likely that a new retaliatory response will be prepared in Beijing, raising the potential harm to both countries' economies.

"This is a fight between unilateralism and multilateralism, protectionism and free trade, might and rules", foreign ministry spokeswoman Chunying Hua told a regular briefing on Wednesday. It said, "the Chinese government will be forced to impose necessary countermeasures" to protect its "core interests". The S&P 500 index rose 0.3 percent to 2,793.84 on Tuesday, climbing to its highest level since February 1.

The office will accept public comments and hold hearings on the plan august 20-23 before reaching a decision after august 31, according to a senior administration official who briefed reporters on condition of anonymity.

The new list of tariff targets from the US Trade Representative includes vacuum cleaners, furniture and auto and bicycle parts, but US-branded smartphones and laptops were excluded.

Trump had earlier said he would upscale the aggression on China if there were any effort to suppress United States exports.

Soon after the imposition of US President Donald Trump's 25% tariff on $34 billion worth of Chinese goods, China's Ministry of Commercestruck back with tariffs of equal sizeon some US exports to China.

However, it will be impossible to reciprocate in-kind on the new September tariffs given that China only imports around $150 billion worth of USA goods. It left untouched USA -branded smartphones and laptop computers.

Investors had been taking the trade war in stride but Tuesday's announcement appeared to dent that optimism.

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"The retaliatory options available to China include boycotting American goods, sharply devaluing the yuan, and selling off U.S. Treasury holdings", wrote Xiao Minjie, senior economist at SMBC Nikko Securities in Tokyo.

CURRENCIES: The dollar eased to 111.23 yen from 111.28 yen on Tuesday.

Japan's benchmark Nikkei 225 fell 1.2% and the South Korean Kospi lost 0.6% while Hong Kong's Hang Seng shed 1.3%.

"Tariffs at the end of the day are a tax, and companies are going to have to figure out how they're going to pay that tax and it's mostly going to come through higher pricing, which is going to slow the economy down", Bergh said. Imposing taxes on another $200 billion worth of products will raise the costs of every day goods for American families, farmers, ranchers, workers, and job creators.

Most economists say the direct effect on the USA economy will likely be small.

Stephen Holmes, a spokesman for the Home Depot, said some of the products on the list - like lumber and carpet - won't affect his company because it receives most of those from the US and Canada. -China trade war made markets topsy-turvy on Wednesday, with US stocks breaking a four-session winning streak and Brent crude prices seeing their biggest one-day drop in two years.

The European Union Chamber of Commerce in China said this week its member companies are rearranging the global flow of their goods to make sure any bound for the United States don't pass through China.

On Monday, Chinese and German companies including BASF and Volkswagen signed business deals worth 20 billion euros ($23.6 billion) during a visit to Berlin by China's No. 2 leader, Premier Li Keqiang.

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