The dollar is sliding as US-China trade war materializes
07 July, 2018, 03:02 | Author: Shannon Aguilar
USA tariffs on $34 billion in Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, as the two biggest economies headed on a risky path toward a full-blown trade war.
Well, that is Beijing's take on President Donald Trump's decision on Friday to impose tariffs worth US$34 billion on a range of Chinese imports, including high-tech equipment and industrial machinery.
As the day dawned across the US on Friday, a new economic reality dawned with it: The tariffs long threatened against billions of dollars in Chinese goods took effect just at midnight ET while many Americans were sleeping - but Beijing was ready immediately with a wake-up call of its own.
Until now, only $3bn of tariffs have taken effect, but President Trump has threatened new tariffs on many occasions. He said that would rise to a full 4 per cent of the global total if Washington, Beijing and other governments follow through on tariff threats.
That would bring the total of targeted Chinese goods to potentially $550 billion - more than the $506 billion in goods that China shipped to the United States past year.
The tariffs also made real a campaign-trail pledge for Trump, who has fulminated for years against what he describes as Beijing's underhanded economic treatment of the United States.
Beijing has said previously it would fire back against an equal value of U.S. exports, including SUVs, meat and seafood. Tensions are escalating, raising the chances that the trade spat will morph into an outright trade war.
The row has caused turbulence on the world's stock markets and could hurt global trade and growth.
Chinese shares, battered in the run-up to the tariff deadline, reversed earlier losses to close higher, but the yuan remained weaker against the dollar. Asian equities wobbled but also managed to end up.
"China will not bow in the face of threats and blackmail, nor will it be shaken in its resolve to defend global free trade", said Gao Feng at a news conference.
China was set to hit back with taxes on an equal amount of US products, including soybeans, lobsters, sport-utility vehicles and whiskey.
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USA carmaker Ford Motor Co (F.N) said on Thursday it has no plans to hike retail prices of its imported Ford and Lincoln models in China, despite the steep additional tariffs on imported US vehicles set to come into play on Friday.
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A statement from the Chinese Commerce Ministry denounced United States actions as "a violation of world trade rules" and warned that the current dispute between both countries was launching the "biggest trade war in history".
After that, the hostilities could intensify: Trump said the U.S.is ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing does not yield to US demands and continues to retaliate.
From Air Force One, on his way to a rally in Montana, Trump said the U.S. is ready to target an additional US$200 billion in Chinese imports - and then US$300 billion more - if Beijing refuses to yield to United States demands and continues to retaliate.
So let's mark the start of the conflict with a collection of some of the most illuminating quotes from the Chinese and American camps-bear in mind that the Chinese administration's views are generally expressed through state media-and from observers of the spat, who are anxious about where this will go.
The official China Daily newspaper accused the Trump administration of "behaving like a gang of hoodlums".
"Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it".
The Trump administration's tariffs on $34 billion of Chinese imports are due to go into effect at 0401 GMT on Friday, which is just after midday in Beijing.
China is expected to retaliate as soon as the USA tariffs go into effect, imposing duties on goods worth roughly the same amount but with a greater emphasis on politically sensitive farm agricultural products.
Rob Carnell, chief Asia economist at ING, said: "This is not economic Armageddon". We will not have to hunt our food with pointy sticks.
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The US Chamber also published an interactive map on the internet showing the impact of the trade dispute in all 50 states. SC has some $3 billion in exports to those countries that either will or could be affected by the new tariffs .
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