Breaking News
0

China vows to hit back over U.S. proposal for fresh tariffs

EconomyJul 11, 2018 03:22PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: File picture of workers riding on an motor rickshaw through an aluminium ingots depot in Wuxi 2/2

By Tony Munroe and Eric Beech

BEIJING/WASHINGTON (Reuters) - China accused the United States of bullying and warned it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10 percent tariffs on $200 billion of Chinese goods and rattling global markets.

China's commerce ministry said on Wednesday it was "shocked" and would complain to the World Trade Organisation, but did not immediately say how Beijing would retaliate in the dispute between the world's two biggest economies. In a statement, it called the U.S. actions "completely unacceptable".

The Chinese foreign ministry said Washington's threats were "typical bullying" and described the dispute as a "fight between unilateralism and multilateralism".

U.S. officials on Tuesday issued a list of thousands of Chinese goods to be hit with the new tariffs. The top items by value were furniture at $29 billion of imports in 2017, network routers worth $23 billion last year and computer components to the value of $20 billion.

The list is subject to a two-month public comment period.

Some U.S. business groups and lawmakers from President Donald Trump's own Republican Party who support free trade were critical of the escalating tariffs. The Republican-controlled Senate voted 88-11 in favor of a non-binding resolution calling for Congress to have a role in implementing such tariffs.

Republican U.S. Senate Finance Committee Chairman Orrin Hatch said the U.S. announcement "appears reckless and is not a targeted approach." Republican U.S. House of Representatives Speaker Paul Ryan accused China of unfair trade practices but added, "I don't think tariffs are the right way to go."

The U.S. Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but does not back Trump's aggressive tariff policies.

"Tariffs are taxes, plain and simple. Imposing taxes on another $200 billion worth of products will raise the costs of every day goods for American families," a Chamber spokeswoman said.

Among the potential ways Beijing could hit back are "qualitative measures," a threat that U.S. businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

HOLDING UP LICENSES

The Wall Street Journal, citing unnamed Chinese officials, said Beijing was considering holding up licenses for U.S. companies, delaying approvals of mergers involving U.S. firms and stepping up border inspections of American goods.

China could also limit visits to the United States by Chinese tourists, a business that state media said is worth $115 billion, or shed some of its U.S. Treasury holdings, Iris Pang, Greater China economist at ING in Hong Kong, wrote in a note.

The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such U.S. measures.

It also highlights how dependent U.S. businesses and consumers are on Chinese goods. In Trump's first round of tariffs, China accounted for 20 percent of total U.S. imports, meaning that substitutes were readily available. In this round, China accounted for more than half of the imports.

There was a price to be paid by American companies as government policies legislated winners and losers.

Home furnishing retailers are expected to be hit particularly hard because China supplies 65 percent of U.S. furniture imports, according to analysts at Goldman Sachs (NYSE:GS).

The prospect of a 10 percent tariff on Chinese furniture imports sent shares of online home store WayFair Inc (N:W) down nearly 4 percent, while shares of Restoration Hardware (N:RH) tumbled nearly 6 percent.

Auto parts retailers, which would also be affected by the latest tariff threats the U.S. lobbed at China, fell more steeply than the broader market. Shares of Advance Auto Parts Inc (N:AAP) were down 1.6 percent, Autozone Inc (N:AZO) fell 1.8 percent and O'Reilly Automotive Inc (O:ORLY) almost 2 percent.

Investors fear an escalating Sino-American trade war could hit global growth and damage sentiment.

By early afternoon, the Dow Jones Industrial Average (DJI) was down 0.72 percent, the S&P 500 (SPX) was down 0.65 percent, and the Nasdaq was off 0.62 percent.

The MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 1.12 percent, while the main indexes in Hong Kong (HSI) and Shanghai (SSEC) recovered somewhat after falling more than 2 percent.

Trump has been following through on pledges he made during his 2016 presidential campaign to get tough on China, which he accuses of unfair trade practices including theft of intellectual property and forced technology transfer that have led to a $375 billion U.S. trade deficit with China.

The U.S. president has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods, roughly the total amount of U.S. imports from China last year.

The new list targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms and increasing the stakes for Republican U.S. lawmakers facing elections in November.

U.S. financial analysts said Trump appeared to believe there was a political benefit to waging a trade war, although that could change quickly amid economic fallout.

"It is now much more likely that the dispute will continue for a prolonged period of time and that we will see ratcheting up of protectionist measures," said Elena Duggar, an associate managing director at Moody's, the credit rating agency.

China vows to hit back over U.S. proposal for fresh tariffs
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
vipul ratanghayra
vipul ratanghayra Jul 11, 2018 2:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Cheap Chinese goods have literally destroyed small scale industries round the globe ,adding up unemployment especially in the developing countries of Asia & africa
Reply
2 0
Vivek Purav
Vivek Purav Jul 11, 2018 1:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Every body is thinking Mr Trum is wrong on imposing tariff, but have you thought about the deficit , do you know what BOP is , no you all dont know and so you think imposing tarrif on sino  goods  is bad idea. today . US is payingo China  800 billion dollar more than what US receives from export to sino. This means this 800 billion dollar is going out of common mans pocket. Free trade policies means not one country become powerful another run in deficit . This is right to impose tariff on china and reduce defficit. Yes peoples will have to face problems , but those are short term In long term it is benefited. Today it is need of time that balance of payment should be maintained or other one country will become stronger and another many will be weaker   .
Reply
2 1
Billy Llaw
Billy Llaw Jul 11, 2018 1:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
I agree.
Reply
1 1
Santosh Koshy
Santosh Koshy Jul 11, 2018 7:56AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It will be excellent and save world if tariff rates on every chineese products are increased to a minimum of 40 to 50%. it will create lot of opportunities to other part of world.
Reply
3 1
Chris Sundo
Chris Sundo Jul 11, 2018 1:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Honestly, Trump belongs to a group of truly weak people. They can't get it right so they must make false promises to get a momentary head start. And when things don't work out they tear down the whole stage to create a commotion just to cause a distraction from themselves and to make other people feel as bad as he feels within himself. You see it in other senseless acts like the hotel shooter who felt so bad about himself that he had to take other people with him. All for what? Another egomaniac who can't accept his failure. People with a thousand lawsuits who are so arrogant that they think they are above the law and live from one intrigue to the next cause themselves a long trail of enemies, ****on earth and in the after-life. It's just a matter of time before the implosion.
Reply
3 5
Chris Sundo
Chris Sundo Jul 11, 2018 1:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
He loves disputes: for any reason; Demanding overtime from his personal driver but stiffing him; Promising golf courses in Scotland/Britain and not pulling through; etc; A trail of broken promises. For What? For the thrill of getting attention. Attention Grabbing Behaviour (AGB). You can see it in children doing anything to get attention, including negative attention. Talks of promise, talks of wishful thinking, Ahhh it feels so good to hear oneself speak those nice juicy promises! .. in one ear, out the other and forgotten. Don't you despise insincere people who invite you and don't follow through?. It's an emotional high from making a new promise .. AGB! He's addicted to the emotional high of getting attention. Addicted to a cocktail of hormones, I call them the '4+' or derivatives of the 4 basic ones: Dopamine, Endorphins, Serotonin, Oxytocin. And one of the derivatives of the basic four is Adrenaline. The adrenaline of telling a lie in the international arena is worth it to him.
Reply
3 3
Anup Ghosh
Anup Ghosh Jul 10, 2018 11:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
trump is a useless president... no productivity only disruptions
Reply
7 6
Daniel Lim
Daniel Lim Jul 10, 2018 11:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Agreed.
Reply
5 2
Martin Babei
Rubberduck1973 Jul 10, 2018 11:21PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Daniel LimAgreed. And the disruption is getting out of hand
Reply
2 2
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email