China vows retaliation for latest US tariff threat

Ivan Schwartz
July 12, 2018

Last week, Washington imposed 25 percent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of USA exports to China.

The new list published on Tuesday targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms. It also would cover various types of farm produce such as cauliflower, cabbage and beans.

However, the worst performing market was the Shanghai composite, which tumbled 1.8 per cent. China immediately retaliated with duties on the same value of USA goods, including soybeans and cars. The Chinese foreign ministry said Washington's threats were "typical bullying" and described the dispute as a "fight between unilateralism and multilateralism".

"Tonight's announcement appears reckless and is not a targeted approach", Senate Finance Chairman Orrin Hatch (R-Utah) said in a statement.

Investors said trade war worries may slip to the background as investors begin to focus more closely on second-quarter earnings over the coming weeks.

It's now safe to say that a trade war is underway between the United States and China. "There is no justification for such action", he said in a statement.

Lighthizer's office will hear public comments on the plan and will reach a decision after August 31, according to a senior administration official who briefed reporters on condition of anonymity. A final decision will come sometime after that.

China's Commerce Ministry has vowed to retaliate to the countermove.

The President, who blames China and other developing countries for hollowing out the USA manufacturing sector, was elected in large part by promising to bring back factory jobs by going to war with trading partners.

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The initial U.S. tariff list focused on Chinese industrial products in an attempt to limit the impact on American consumers. Those nations also have retaliated. Shares of Advance Auto Parts Inc were down 1.6%, Autozone Inc fell 1.8% and O'Reilly Automotive nearly 2%.

The dollar broke through the psychological barrier of 112 yen for the first time since January, rising as much as 1.3% to a top of 112.03 yen.

Materials, down 1.7 percent, was another big negative influence on the market, with Freeport-McMoRan down 3.9 percent as copper prices hit their lowest in about a year.

Three-month aluminum on the London Metal Exchange lost 1.41 percent to $2,060.50 a tonne.

Brent crude rose 0.7 per cent to $73.93 a barrel after tanking 6.9 per cent overnight. USA crude oil futures settled $US3.73, or 5.03%, lower at $US70.38 per barrel.

In Europe, shares extended losses after Trump kicked off a North Atlantic Treaty Organisation summit in Brussels by accusing Germany of being a "captive" of Russian Federation. "Who would think?" Mr Trump asked reporters yesterday at the White House. They criticize Trump's tactics but share USA complaints about Beijing's industrial policies. "But we will work it out and all countries will be happy".

"In part because they have only limited ammunition and in part because it's still early in the process on the United States side", Mr Kuijs added.

Germany's energy spending "is a national decision", commented Mr Stoltenberg, adding, "It's not for North Atlantic Treaty Organisation to settle that issue".

Members of Congress are increasingly questioning Trump's tactics.

Other reports by GizPress

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