Markets

China vows retaliation for $200 billion U.S. tariff threat

China vows retaliation for $200 billion U.S. tariff threat

The Trump administration said the proposed list, which would put 10 percent tariffs on thousands of different categories of Chinese imports, is needed to increase the pressure on Beijing to change what the USA calls unfair trade practices.

Tariffs imposed by the United States on Chinese products now vary between 10-20%, depending on the goods in question.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further.

City traders will be trudging wearily to their desks this morning after last night's gripping World Cup drama, and worrying about the impact of a US-China trade war.

The Wall Street Journal, citing unnamed Chinese officials, said Beijing was considering holding up licenses for USA companies, delaying approvals of mergers involving US firms and stepping up border inspections of American goods.

But the US action drew a swift reaction from the plastics and petrochemical industries, with the head of the Plastics Industry Association saying the tariffs would "boomerang" and hurt manufacturing. In a statement, it called the USA actions "completely unacceptable".

The Trump administration is preparing another round of tariffs on Chinese goods worth $200 billion, ramping up the US-China trade war.

The new list-targeted at China's key manufacturing export industries-contains over 6,000 products, including fruits, vegetables, live eels, feathers and beaver heads as well as hi-tech minerals that the US needs.

FILE - Imported nuts from the United States are displayed at a supermarket in Beijing, March 23, 2018.

US officials on Tuesday issued a list of thousands of Chinese goods to be hit with the new tariffs.

Trump said in June that the United States would be willing to enact a fourth round of tariffs on goods worth $200 billion if China retaliated yet again.




Senate Finance Committee Chairman Orrin Hatch said the announcement "appears reckless and is not a targeted approach".

The intensifying trade war between the world's biggest economies was also a drag on commodity markets.

The country has informed the WTO it plans to impose retaliatory measures on USA goods to the tune of 50 billion yen (395 million euros, $455 million), after failing to persuade Washington to exempt it from the tariffs.

A final decision on the products to be hit with the new tariffs is expected following a consultation period in August.

"This type of irrational behaviour is unpopular", the statement said, adding China would tack on the case to its suit against the USA at the WTO. "Consumers, businesses and the American jobs dependent on trade, are left in the crosshairs of an escalating global trade war", said Hun Quach, the head of worldwide trade policy for the group.

Shares of NXP Semiconductors NXPI fell roughly 4 percent Wednesday after the report.

"They go low, we go high", he said, in an apparent jab at Trump as he borrowed a phrase used by former U.S. First Lady Michelle Obama in the 2016 U.S. election campaign.

Oliver Jones from Capital Economics has warned that China's response to Trump's latest tariff threat could hit the U.S. stock market hard.

"Tariffs on $US200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families", said Scott Lincicome, a trade lawyer and senior policy analyst for the group Republicans Fighting Tariffs.

Beijing recently indicated that its response to more tariffs would include "qualitative" measures, which many analysts interpreted as creating regulatory hurdles or even stoking anti-US sentiment among consumers of USA products. "But more tariffs like these will punish America's manufacturing workers - and could undermine our hard-won gains thanks to tax and regulatory reform".