Trump's Trade War Officially Begins - Hit & Run

Trump's Trade War Officially Begins - Hit & Run

If the U.S. and China cool off after a first round of tariffs, the fallout will be modest.

The trade war between the U.S. and other major economies escalated on Friday after Washington and Beijing launched punitive import tariffs on $34bn (£25.7bn) worth of each other's goods.

Hours before Washington's deadline for the tariffs to take effect, U.S. President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China previous year.

"After the United States unfairly raised tariffs against China, China immediately put into effect raised tariffs on some U.S. goods", said Foreign Ministry spokesman Lu Kang. "And these trade tariff issues-the final outcome is yet to be determined", Moore said.

"Such tariffs are typical trade bullying, and this action threatens global supply chains and value chains, stalls the global economic recovery, triggers global market turmoil, and will hurt more innocent multinational companies, enterprises, and consumers", the statement said.

"Trade war is never a solution", Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and eastern European countries.

"There should be no doubting Beijing's resolve", the China Daily said. He told CNBC that there may be no way to escape a trade war with China. The reality is that trade wars are damaging to everyone, not just the participants, and no one will "win".

USA stocks were little changed and the dollar extended losses in early trading in NY. Trump's attempt to use the steel and aluminum tariffs to pry concessions from the Mexicans and Canadians proved futile. Asian equities wobbled but also managed to end up.

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Beijing had earlier released a target list of $34bn worth of imported United States goods including autos and agricultural products also faced 25 percent tariffs.

USTR and the U.S. Department of Commerce said that they were working together to defend the right of the United States to continue treating China as a non-market economy in anti-dumping investigations until China makes the reforms it agreed to when it joined the World Trade Organization (WTO). The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

There are already signs within the U.S. that companies are pausing decisions on investment and hiring and input costs flowing from the earlier increase in duties on steel, aluminium and washing machines are flowing through to higher end-prices.

China's exports to the United States increased by 5.4 percent in the first half, 13.9 percentage points slower than the same period past year, customs data showed. Medical imaging scanners such as CT, MRI, and ultrasound systems were on a list of 1,300 products the administration said would be slapped with tariffs.

Trump and his advisers argue the tariffs are necessary to pressure China into abandoning unfair practices such as stealing intellectual property and forcing American companies to hand over valuable technology.

Second, China is trying to leverage its purported victimhood to isolate the United States - and rally Trump's other trade-war victims into a new anti-American alliance. He added the U.S. is ready to target an additional $200 billion, and then $300 billion more should Beijing retaliate. The EU has said it will impose its own tariffs of about $US300 billion on U.S. imports if he follows through.

The direct impact on China's economic growth in 2018 is estimated at 0.1-0.3 percentage points while the drag on its export growth is expected to be 1 percentage point.

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