Markets

‘Totally unacceptable’: Beijing vows retaliation if USA taxes $200bn of Chinese goods

‘Totally unacceptable’: Beijing vows retaliation if USA taxes $200bn of Chinese goods

"This type of irrational behavior is unpopular", the statement said, adding China would tack on the case to its suit against the U.S. at the WTO.

China said tit-for-tat tariffs will "destroy" trade between the world's top two economies, after Washington fired the next shot in a ballooning trade war, readying fresh levies on $200 billion in Chinese goods.

"The latest list of $200 billion of products to be subject to tariffs against China doubles down on a reckless strategy that will boomerang back to harm USA families and workers". The proposed list of goods includes consumer items such as clothing, television components and refrigerators as well as other high-tech items, but it omitted some high-profile products like mobile phones.

On Tuesday, US officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminium, prompting criticism from some US industry groups.

U.S. Trade Representative Robert Lighthizer said Washington did a thorough investigation to justify imposing tariffs on $50 billion worth of imports to compensate for the harm to the U.S. economy caused by China's unfair trading practices, including theft or forced transfer of American technology.

"Unfortunately the markets haven't come to grips with the current levels of trade policies and tariffs", said Art Hogan, chief market strategist at B. Riley FBR in NY.

"We have been very clear and detailed regarding the specific changes China should undertake". His determination to renegotiate trade deals has targeted not only competitors on the world market such as China, but longtime friends and allies such as the European Union or Canada.




At a forum in Beijing, a senior official accused the USA of "damaging the world economic order" and said it would "destroy" trade between the rival powers.

China's compliance with WTO guidelines lies at the heart of the conflict, notably over Beijing's alleged state support for purportedly private companies.

China is no stranger to trade fights, but their approach toward the U.S. is being handled differently than prior battles.

"This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies", Robert Lighthizer, the USA trade representative (USTR), said. "If the USA goes ahead with more, China needs a combination of tools and it is prudent to guard against downside risk to growth too". This has raised concerns that China could retaliate with non-tariff trade measures. "There is no justification for such action". "I think most investors are looking at this trade war and thinking 'it's not going to happen, '" said Michael Diaz, head of foreign exchange at XE. China has pledged to fight back dollar-for-dollar.

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

In a bid to minimize tensions both diplomatically and in the financial markets, a memo from the Chinese government was distributed to reporters outlining instructions on how to cover the tariff battle with America. That would leave China only $80 billion for further retaliation.

US crude oil exports to China averaged 330,000 bpd between January and April this year, with February sales to China beating even exports to Canada, according to the EIA. The Chinese government's industrial strategy to make its goods competitive on the global market, in place since 2015, seems to have been one of the key instigators of Trump's trade war.