Trump’s tariffs on China kick in

On July 6, United States tariffs on $34 billion in Chinese imports took effect, firing the first shots in a trade war between the world’s biggest economies. 

  The United States imposed the first duties on $34 billion in Chinese goods early Friday, officially launching a trade war between the world’s two largest economies.  Moments later, the Chinese side fired back, accusing the United States of violating WTO rules setting off “the largest trade war in economic history to date.”

“In order to defend the core interests of the country and the interests of the people, we are forced to retaliate,” said the Chinese Commerce Ministry in a statement.

Although the Chinese statement did not outline targets, Beijing has promised to slap levies on an equal amount of American goods, including heartland staples like soybeans, corn, pork and poultry — a move President Trump said would compel the U.S. to hit China with levies on up to $500 billion in products.

In the short term, analysts said, the moves may disrupt markets and hinder trade in both countries.

“For industries that are directly impacted by the tariffs, the impact will be immediate and big,” said Yanmei Xie, a China policy analyst at Gavekal Dragonomics, an economic research firm in Beijing.

Meanwhile, Russia said it was imposing tariffs on U.S. products in response to the tariffs on steel and aluminum that Trump imposed in March. Import taxes of 25 percent to 40 percent will be applied to various American industrial goods, including those used in the construction and energy sectors, according to Economy Ministry Maxim Oreshkin.

The retaliation announced Friday will provide compensation of almost $88 million, far less than the nearly $538 million that Trump’s tariffs have cost Russian companies, Oreshkin said. Russia also has joined the European Union, China, India and Canada in complaining to the World Trade Organization about the American action.

Still, Russia is not a top commercial partner for the U.S. The total two-way goods trade between the two countries last year was about $24 billion, roughly the U.S. and China exchange every two weeks.

The risk of escalation — specifically Trump’s $500 billion dollar threat against China — has analysts worried. “The countdown is on as to what Trump will do next,” said Xie.

Chinese analysts said the first round would be tough but manageable, but were bracing for more to come.

“The first round’s impact is not that big, but the key is whether there will be more — a second round of revenge and retaliation and a third round,” said Shi Yinhong, a professor of international relations at Renmin University in Beijing.

Trump on trade: U.S. allies ‘more devastating than our enemies’

President Trump on June 27 again promised to fix “broken” trade deals, saying the U.S. is the “piggy bank that everybody wants to rob.” 

The risk of an ever-escalating U.S-China trade war has businesses in both countries nervous.

Despite frustration with Chinese trade practices, U.S. businesses have warned for months that Trump’s trade threats may do more harm than good.

“There are no winners in a trade war,” William Zarit, chairman of the American Chamber of Commerce in China, said in a statement published just moments before the 12:01 deadline.

“While our 900 member companies continue to suffer from not having a level playing field in China, they are still extremely clear: Increased tensions in the U.S.-China economic relationship will negatively impact their operations in China,” he said.

Some U.S. companies scrambled Friday to reach China before the tariff deadline.

The Internet watched one cargo ship carrying a load of soybeans race to the southern peninsula port of Dalian in Liaoning province. Peak Pegasus was scheduled to reach its destination an hour after China was expected to enact a 25 percent tax on its goods, according to Bloomberg ship data.

A half-hour before noon in Beijing, the ship was passing South Korea’s Jeju Island — close but not quite cutting it.

And Beijing’s tactics may go beyond tariffs to include arbitrary quarantines and a costly uptick in customs inspections.

Shaun Rein, managing director at the China Market Research Group in Shanghai, said the Chinese government’s next play could be to stoke anti-American sentiments among consumers — similar to the boycotts it ordered last year on South Korea’s Lotte Group, which caused dozens of the company’s convenience stores to shutter.

“If I was Starbucks or Apple,” he said, “I would be scared right now.”

Trump has vowed for years to tackle Chinese trade practices, accusing Beijing of stealing U.S. intellectual property and slammed the $375 billion U.S. trade deficit with the country.

He argues that China should purchase more American goods, and has blamed trade with Beijing on the loss of American jobs throughout the Rust Belt. (Economists say both globalization and the rise of automation shrank the kind of manufacturing operations that U.S. companies in recent years have shuttled abroad.)

At a rally Thursday in Montana, he said, again, that China is “killing us” on trade.

Chinese officials, however, are projecting studied confidence, asserting the Asian nation is better equipped to withstand the turbulence.

“Our commodity market and job market are relatively flexible, and our foreign-related economic sectors’ ability to make flexible adjustment is more prominent,” said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, in an interview Thursday with the Chinese financial newspaper Financial News.

The Chinese side sees Trump’s threats as an attempt to hold back its economic growth — and has vowed to match them move for move.

 “Whether it’s through trade war or other means, the end goal is to make China subservient to the United States,” said He Weiwen, vice president of the Center for China and Globalization, in Beijing. “That’s impossible. China won’t accept that,” he said, adding “what happens next depends on the United States. China will be prepared to follow suit.”

Luna Lin, Amber Ziye Wang and Yang Liu in Beijing contributed to this report.


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