US President Donald Trump sets China tariff plan

REUTERS

REUTERS

President Donald Trump has slapped tariffs on $50 billion worth of Chinese goods, taking aim at China's theft of US intellectual property.

Still, not all Chinese consumers viewed negatively the potential higher duties on USA fruit and nuts.

If the latest proposed tariffs appear measured compared to Mr. Trump's initial rhetoric, how far China is willing to go to defend itself is hard to predict.

Japan's Nikkei closed 4.5% lower while Hong Kong's Hang Seng was down by 2.4%, South Korea's Kospi lost 3.2%, and China's Shanghai Composite dropped 3.4% in value - following steep declines on Wall Street earlier. Foreign business groups complain Chinese regulators are trying to squeeze them out of promising industries.

The gains to the US economy aren't limited to Silicon Valley.

There will be a 30-day consultation period that only starts once a list of Chinese goods is published.

"This is number one, but it's the first of many", Donald Trump said.

That will nearly certainly spell a further escalation of tensions.

The US President claims China has for years engaged in unfair trade practices that have hurt US firms. "This can turn ugly on a global scale very quickly".

The Trump administration already poked China in January with tariffs on imported solar panels.

The U.S. also imposed new tariffs of 25 percent on imported steel and 10 percent on aluminum. ITI calls the tariffs "the wrong solution to real problems", and RILA says the decision "clearly misses the mark".

State media in China responded in similarly robust fashion.

"China's response should follow the principle of a precision strike", wrote Mei Xinyu, a researcher at a Commerce Ministry think-tank in an opinion piece for China Daily.

China is the single largest supplier of apparel and textiles to the US market, in aggregate. In a move to punish Beijing for stealing American technology, the White House set in motion tariffs on up to $60 billion in Chinese imports and restrictions on new Chinese investment in the U.S. "But China is not afraid of, and will not recoil from, a trade war".

It would be a major blow to U.S. farmers, as a third of their soybean exports go to China, in a business worth $14 billion previous year. "China won't change its ways". He predicted tough talks ahead.

"With the restrained response, China hopes Trump can realise his errors and mend his ways", said Xu Hongcai, deputy chief economist at the China Centre for International Economic Exchanges, a Beijing think tank.

Chinese officials are trying to figure out how to address US concerns, said Jake Parker, vice president for China operations of the U.S. Ever since his presidential campaign he has threatened to pull the US out of the body.

Taiwanese companies are involved in every step of the supply chain in China, with some making their products in China before exporting them to the United States or Europe and others exporting semi-finished products to China before selling them to other countries, Wu said. USA businesses purchasing materials from China will either have to absorb additional costs or change their sourcing strategy.

The American Chamber of Commerce in China said its members wanted the US administration to advocate more strongly for a level playing field and reciprocal treatment to improve market access -despite concerns that the current actions could disrupt the global economy.

Many countries went to the WTO on Friday to express concern about the US move, with China and Russian Federation specifically calling on the U.S.to follow WTO rules and uphold its commitment to the trade body. "We feel that focusing on reciprocal treatment while maintaining strong communications between the governments will be the best path forward to get to our goal of a level playing field based on fairness".

"Until the Trump administration articulates those concerns and how China can address them, it's going to be very, very hard for China to make those changes", said Parker. The Trump administration, true to form, wants to cut the program instead.

"It's remarkable how badly Xi Jinping has mishandled and damaged the U.S". The U.S. delegation cast the only "no" vote, while 28 states voted in favour, including China, and 17 abstained with one delegation absent. "It's a structural problem which has nothing to do with either the trade deficit or employment".

For some in China, that sends a worrying message. "There are many political factors behind this, such as the fight for [global] leadership and the conflict over ideologies".

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