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China throws down gauntlet to Trump on trade with new tariffs against US goods

Chinese officials have warned the US is risking an all-out trade war after hitting backat the Trump administration with retaliatory tariffs on key American goods.
The Chinese vice finance minister, speaking in a press conference on state broadcaster CCTV, said that the nation had thrown down our gauntlet in its latestresponse to trade aggression by putting an additional 106 tariffs on US products on Wednesday. These include American soy beans, beef, steel, aluminium, cars, aeroplanes and tobacco.
The move followed the introduction of tariffs on 128 categories of imports from the USonMonday, and matches the 25pc levy Washington has said it will place on 1,300 Chinese goods.
Zhu Guangyao said that China was open to the whole world and had been acting under free-trade principles. He added that China has never bowed to external pressure throughout its history and its GDP will increase further even in the face of growing trade tensions.
The move sent jitters through global markets. The Dow Jones opened down 2pc on the news, with shares in aircraft maker Boeing tumbling 4pc, although Wall Street later reversed losses after Donald Trumps adviser Larry Kudlow said the administration was involved in a negotiation rather than a trade war.
"I doubt if therell be any concrete actions for several months," he told Fox News.
China throws down gauntlet to Trump on trade with new tariffs against US goods

China is dependent on the US for imports of soybeans tariffs could harm both sides

Credit:
Dan Koeck/Reuters
China would prefer to pursue any trade disagreements through theWorld Trade Organisationbut has claimed that US action forced its hand.
Vice commerce minister Wang Shouwen said that the US decision to try to settle a dispute unilaterally following aninvestigation made it clear that it was they who wererisking a trade war.
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue! Donald J. Trump (@realDonaldTrump) April 4, 2018
"[The US is acting unilaterally] sowho is the initiator of the trade war?" Mr Shouwen said on CCTV.
China has no other option we have thrown down our gauntlet, Mr Zhu added. He left the door open to some negotiation with the US however, adding that both sides have the ability to resolve this.
The remarks came as US Commerce Secretary Wilbur Ross told CNBC that it"wouldn't be surprising at all if the net outcome of all this is some sort of a negotiation". The likely timing for such trade talks was unclear, however, with Mr Ross refusing to commit toany timescale.
We cannot keep a blind eye to the rampant unfair trade practices against our Country! Donald J. Trump (@realDonaldTrump) March 14, 2018
President Donald Trump has made no secret of his anger at the theft of US intellectual property by Chinese firms. Mr Shouwen appeared to offer an olive branch in this area,admitting that there was always room for improvement on the issue.
Chinas tariffs are carefully targeted at key US exports produced by voters whom President Trump has vowed to help.
These include steel and aluminium products, and cars and planes made by the manufacturing companies he wants to protect with the USs own tariffs.
Farmers are also on the hit list. One-third of US soybeans are sent to China, with pork also heavily traded between the worlds biggest two economies.
Beef, nuts, cranberries and orange juice are other important US exports facing taxes.
Chinese officials described tariffs as a lose-lose situation.
This is clearly illustrated in the pork market.
China is a significant consumer of pork, yet is prepared to tax meat imports and soybeans, which are used to feed pigs. This will drive up costs to its own consumers even as it hitsback at the US levies. China would struggle to replace its soybean supply from other countries, which combined still produce less than it imports from the US.
Overview | Free trade versus protectionism
Credit ratings agency Standard and Poors said the disputecould have serious ramifications for the two countries other trading partners.
The tariffs announced so far by the Trump administration will likely have minimal direct macroeconomic effects boosting consumer price inflation only marginally and weighing a bit on already sluggish productivity growth, the agency said.
The greater risk is that some of the USs trade partners will retaliate and spark an all-out trade war that eventually hurts exporters not only in the worlds biggest economy but around the globe.
The increased possibility for additional tariffs, trade skirmishes, and retaliation from other countries could derail global growth.
So far other countries have won exemptions from US tariffs on steel and aluminium, including Mexico, Canada, the EU, Australia, Brazil and South Korea.
The greater risk is that some of the USs trade partners will retaliate and spark an all-out trade war that eventually hurts exportersStandard and Poors
But broader taxes on imports and crackdowns based on the origins of parts in manufactured goods with complex supply chains could harm global trade more widely.
Analysts added that there was still room to avoidcatastrophe.
Trade War is a convenient shorthand. We expect the confrontation between the US and its trading partners, particularly China, ultimately to lead to negotiated compromises on a range of trade, tariff, access and intellectual property issues, said Jon Harrison at TS Lombard.
By contrast, a full-on trade war, which we do not expect, would entail escalating tit-for-tat protectionist measures that would have a deeply negative impact on trade. World trade volumes may not deliver on the optimistic expectations of some analysts, but we do not expect a collapse. Markets will none the less remain on edge owing to the chaotic US negotiating style.
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