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Trade war heats up as US, China lash out with biggest sets of tariffs yet
THE commercial battle between the United States and China heated up on Monday as the economic powerhouses slapped each other with the largest rounds of tariffs yet, unleashing punitive duties now on roughly half of their traded goods.
US President Donald Trump imposed fresh levies on US$200 billion in Chinese imports, prompting Beijing to respond with tariffs on US$60 billion in American goods, approaching the point of running out of US products to target.
Neither of the world's two largest economies showed signs of backing down, and there are no further trade talks scheduled to resolve the dispute.
As the new tariffs hit, the Chinese government released a report accusing the Trump administration of a foreign policy based on "trade bullying" and "attempting to impose its own interests on China through extreme pressure", according to state media.
"It has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China," it said.
Thousands of goods now face border taxes of up to 10 per cent, including grocery store staples, household objects and industrial equipment. Economists expect the cost of food, clothing, furniture, toys and cars to swell, triggering lay-offs across industries in both countries.
Mr Trump warned this month that retaliation from Beijing would spark another set of tariffs on US$267 billion in Chinese goods, erecting financial barriers on virtually everything that the United States buys from the nation. (In 2017, that order reached US$505 billion.) Beijing cannot match Washington dollar for dollar in a full-blown trade war - the Asian nation imported US$130 billion in US goods last year - but officials have said that China will keep fighting back with "qualitative" measures. American business groups have taken that to mean an array of regulatory headaches: stalled visas, delayed licences and spikes in port inspections.
The latest levies from Beijing affect more than 5,200 kinds of American imports, including chemicals, industrial wares and medical instruments.
The United States started imposing levies in July on US$50 billion in Chinese industrial imports as Mr Trump sought to confront trade practices that he deems unfair. The White House has accused Beijing of stealing American intellectual property and propping up Chinese firms with subsidies that disadvantage manufacturers on US soil.
"We've taxed them US$50 billion - that's on technology," the president recently told reporters on Air Force One. "Now we've added another US$200 billion. And I hate to say that, but behind that, there's another US$267 billion ready to go on short notice if I want. That totally changes the equation."
China has refused to cave amid Mr Trump's escalating threats. Officials last Friday cancelled trade negotiations that were scheduled this week in Washington and then scrapped military talks with the United States that were supposed to start in Beijing on Tuesday. (Beijing abandoned the defence-related conversations in response to American sanctions imposed last week on Chinese military personnel for buying combat aircraft and missile supplies from Russia.)
Analysts said that Chinese President Xi Jinping is trying to show strength on the world stage as the Chinese public, whose respect is crucial to his sustained power, increasingly bash Mr Trump online for picking on China.
Beijing has launched efforts to influence the conversation in the Midwest, as well. State media purchased a four-page advertisement in Iowa's largest newspaper, warning American soya bean farmers that Mr Trump's trade war would shift business to South America.
"As the largest importer of US soybeans, China is a vital and robust market we cannot afford to lose," the advertisement in The Des Moines Register said, quoting Davie Stephens, vice-president of the American Soybean Association.
A coalition of more than 80 industry and agricultural groups in the United States, meanwhile, also protested on Monday the intensifying economic conflict.
"Americans are waking up today to a tax increase on the things they rely on to provide for their families," Brian Kuehl, spokesman for Tariffs Hurt the Heartland, said in a statement. "From furniture to pet food, lightbulbs to baby cribs, even groceries and toilet paper will be taxed by these tariffs."
Chinese officials have acknowledged that the trade war could hinder their country's economic progress. Heftier price tags on household goods is an especially precarious forecast in a country where consumer spending drives the bulk of growth. (Shopping is already waning, China watchers said.) China's central bank has let its currency slide about 5 per cent this year, boosting Chinese exports in overseas markets while making imports more expensive.
And the months-long storm of tariffs has apparently rattled investors: The Shanghai Composite Index, the country's main stock gauge, has dropped more than 20 per cent since January. WP