China rejects ‘blackmail’ on eve of USA tariff hike

Sunday, 08 Jul, 2018

The European slammed the move as protectionism and slapped counter-measures on US products.

China's Ministry of Commerce on Friday accused the USA of "launching the biggest trade war in economic history" in a statement (link in Chinese).

USA officials accuse China of building its emerging industrial dominance by stealing the "crown jewels" of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions. American officials worry USA industrial leadership will be eroded by Chinese plans to create tech champions in fields including robotics, biotech and artificial intelligence.

Twenty-five percent USA tariffs took effect at midnight and affect more than 800 Chinese products - including industrial machinery, office equipment, electronics, medical devices and vehicles. Trump said Thursday he is willing to impose tariffs on $550 billion in Chinese imports.

Under the banner of his "America First" policy, Trump has also targeted other traditional trade partners of the USA, such as the European Union, Japan, Mexico and even Canada.

China's Ministry of Commerce said Friday in a statement that the USA had launched "the largest trade war in economic history".

"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 ministry spokesman Gao Feng at a news conference.

And, three, the likelihood of lower global growth, triggered by a trade war and the prospect of supply disruptions, could cause share prices to tank, initiating a flight of capital from emerging markets to the safety of the home market, making currencies and interest rates move in wholly undesirable ways.

Tokyo closed 1.1% higher, but Hong Kong fell 0.5% in late trading.

The tariffs would mark a significant escalation in the trade dispute between the world's two biggest economies.

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Beijing has announced changes this year including easing limits on foreign ownership in insurance and some other fields. Another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of USA goods imports from China in 2017.

Months of dialogue between the two economic superpowers appeared to have failed, with Trump warning just hours before the tariffs came into effect that Washington was ready to impose duties on hundreds of billions of dollars more in Chinese imports. He did not specify the amount or types of the United States goods that will be taxed by China.

"The port of Shanghai put on hold clearing some U.S. imports through customs, said an official at a company in the coastal city, which handles customs clearance for importers", Reuters said, noting the source said that he had spoken to customs officials.

The U.S. also has irked some of its closest allies by hiking import duties on steel, aluminum and autos from Europe, Japan, Canada and Mexico. Some have responded by hiking their own tariffs on USA goods.

"This is a potential concern for the outlook of corporate investment and consumption around world", said Hui.

"In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China", the state-run China Daily newspaper said in an English language editorial on Friday.

Economists say that if the back-and-forth stops there, the overall impact on both economies will be minimal even though some industries will suffer.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

In a Fargo rally last week aiming to boost Heitkamp's Republican challenger, Rep. Kevin Cramer, Trump said he was seeking "fair and reciprocal" trade relations. Americans worry that rising Chinese technological prowess might erode USA industrial leadership and prosperity.