United States trade measures will backfire

The U.S. put a 25 per cent tax on $34 billion worth of Chinese imports Friday.

The world's two biggest economies slapped tit-for-tat duties on US$34 billion worth of each other's imports on Friday, with Beijing accusing Washington of triggering the "largest-scale trade war" as they sharply escalated their conflict.

The conflict between the world's two biggest economies reflects chronic tension in their relationship as customers, business partners, and increasingly competitors.

The United States is also set to impose 25% tariffs on another $16 billion in Chinese exports later in the summer, and China has vowed to retaliate against USA goods worth a similar amount.

"I've watched for too many years. how we always end up taking the brunt of most trade deals", he said.

Profit forecasts that include a potential tariff impact will perhaps even overshadow second-quarter earnings growth, which analysts say could equal or surpass the first-quarter's 26.6% year-over-year increase.

"We are in a trade war", he said.

Mr Trump said: "You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. OK?"

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.

"We are deeply concerned over the escalated trade tensions between the United States and China", said Bruce Blakeman, vice president of corporate affairs in Asia Pacific at USA agribusiness company Cargill.

Chinese Commerce Ministry spokesman Gao Feng said on Thursday that the proposed US tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work. For instance, the U.S. and China are Hong Kong's major economic partners, but its economy is dominated by services, which are not subject to tariffs.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union.

For example, US-based audio company Sonos Inc noted in an initial public offering on Friday its performance "may be materially harmed" by trade restrictions.

All necessary steps are being taken to stabilize the forex market and enhance liquidity if irregularities or seasonal factors trigger disorder and threaten to hamstring economic development, the Central Bank said.

In May, the figure swelled to US$24.6 billion, which was nearly all of China's total surplus of $24.9 billion, compared to the same period a year ago.

The Standard & Poor's 500 index rose almost 1 per cent on Friday, with traders saying they had priced in the U.S. and China enacting tit-for-tat duties. It said they would damage the global economy unless other countries stop them.

The first round targets Chinese industrial goods, not consumer products, in an attempt to limit the impact on USA households, but companies that rely on Chinese-made machinery or components may eventually have to pass along increased costs to customers. The products, sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.

In 1900, tariffs accounted for about 30% of the total value of United States imports, as the country was trying to restrict imports and develop its young industrial sector. With the jobless rate so low, those who lose jobs because of the tariff fight could have an easier time finding other work.

In the first quarter, year-over-year S&P 500 capital expenditure growth was the highest since 2011, according to S&P Dow Jones data. However, investors said a significant escalation intention would cause worries to set in.

Tomoo Marukawa, professor at the Institute of Social Science of the University of Tokyo, said the United States' goal of reducing trade deficits by tariff measures, especially by imposing tariffs on Chinese goods, will by and large fail.

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports.

"We are disappointed that agriculture continues to be placed in the middle of the tariff debate with China", Rohrscheib said.

  • Zachary Reyes