You are here

TRADE TENSIONS

US 'opening fire' on world with tariff threats, China says

2015-08-31T182416Z_754810377_TM3EB8V0YCW01_RTRMADP_3_USA-CHINA-SANCTIONS.jpg
The United States is "opening fire" on the world with its threatened tariffs, China warned on Thursday, saying no one wants a trade war, but that it would respond the instant US measures go into effect.

Beijing

THE United States is "opening fire" on the world with its threatened tariffs, China warned on Thursday, saying no one wants a trade war, but that it would respond the instant US measures go into effect.

The Trump administration's tariffs on US$34 billion of Chinese imports are due to take effect at 0401 GMT on Friday, which is just after mid-day in Beijing (and Singapore).

US President Donald Trump has threatened to escalate the trade conflict with tariffs on as much as US$450 billion worth of Chinese goods if China retaliates, with the row roiling financial markets including stocks, currencies and the global trade of commodities from soybeans to coal.

sentifi.com

Market voices on:

China has said it will not "fire the first shot", but its customs agency made clear on Thursday that Chinese tariffs on US goods would take effect immediately after US duties on Chinese goods kick in.

Speaking at a weekly news conference, Commerce Ministry spokesman Gao Feng warned that the proposed US tariffs would hit international supply chains, including foreign companies in the world's second-largest economy.

"If the US implements tariffs, they will actually be adding tariffs on companies from all countries, including Chinese and US companies.

"US measures are essentially attacking global supply and value chains. To put it simply, the US is opening fire on the entire world, including itself.

"China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade and the multilateral system."

Asked whether US companies would be targeted with "qualitative measures" in China in a trade war, Mr Gao said the government would protect the legal rights of all foreign companies in the country. "We will continue to assess the potential impact of the US-initiated trade war on companies and will help companies mitigate possible shocks."

He said China's foreign trade was expected to continue on a stable path in the second half of the year, though investors fear a full-blown Sino-US trade war would deal a body blow to Chinese exports and its economy.

Foreign companies accounted for US$20 billion, or 59 per cent of the US$34 billion of exports from China that will be subject to new US tariffs, with US firms accounting for a significant part of that 59 per cent, Mr Gao said.

At a separate briefing, Chinese Foreign Ministry spokesman Lu Kang sidestepped a question on whether there had been efforts to initiate new talks with the US.

"We of course don't want to fight a trade war, but if any country's legitimate interests are harmed, then of course that country has the right to firmly protect its own interests."

China's plans to impose tariffs on hundreds of US goods targets some top US exports, including soybeans, sorghum and cotton, threatening US farmers in states that backed Mr Trump, such as Texas and Iowa.

Chinese buying of soybeans has ground almost to a halt ahead of the duties, while Chinese farmers worry the penalties and tighter supplies will drive up costs, squeeze margins and ultimately inflate retail prices of pork, the country's top-selling meat.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying US coal and heading for China was diverted on Wednesday to Singapore.

The World Trade Organization warned on Wednesday that trade barriers being erected by major economies could jeopardise the global economic recovery, with their effects already starting to show.

Chinese stocks slipped on Thursday and the yuan steadied from earlier losses as a targeted cut of reserve requirements for banks took effect amid the heightened trade tensions. China's central bank moved to calm jittery markets on Tuesday after the yuan hit its lowest level in almost a year. REUTERS