China vows retaliation for US$200B US tariff threat

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A Commerce Ministry statement said, "It is totally unacceptable for American side to publish a tariff list in a way that is accelerating and escalating".

In Brussels, a top European Commission official, Vice-President Valdis Dombrovskis, said he was "concerned" about an "immediate economic impact" from not only the latest tensions but also about a broader unravelling of the multilateral trading system. A Bank of America survey last week reported that investor thinking had shifted since the spring, and the market saw potential dollar-positive implications from a trade war, as the United States would be better equipped to weather a slowdown in trade than other major economies.

Benjamin Tal, Deputy Chief Economist for CIBC, said he can't see any scenario where Canada is winning. While China has long sought foreign energy providers to fuel its massive growth, it's becoming more self-sufficient. The US had said it would consider requests from some countries to be exempted from other sanctions that it plans put into effect in November that prevent Iran from exporting oil.

"Farmers have done poorly for 15 years. If the Americans can not export to China, they will look for markets in Canada - Europeans will look at the other markets, and all of a sudden Canada will be damaged".

Administration officials said they're turning up the pressure on China to stop swiping American intellectual property and to ditch policies that push US companies into divulging their trade secrets in order to enter the Chinese market.

'Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families, ' trade lawyer Scott Lincicome said.

Analysts say a full-blown trade war with China could wound the U.S.in several ways. He also called for Trump to sit down soon with Xi to address their differences - a move that was then echoed by House Speaker Paul Ryan.

But there are other things that I think the Chinese are doing.

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The $200 billion move came in response to Beijing's retaliation for the first set of USA duties, which primarily targeted farmers in America's heartland, but the new tariffs won't be imposed until the end of a two-month period for public comment.

The Trump administration on July 6 imposed 25 per cent duties on US$34 billion in Chinese imports, the first time the president has implemented tariffs directly on Beijing after threatening to do so for months.

China hasn't yet clarified how it will respond to the latest salvo.

The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such US measures.

China's compliance with WTO guidelines lies at the heart of the conflict, notably over Beijing's alleged state support for purportedly private companies. For example, the tariffs will affect parts of planes and vehicles made in China.

Beijing on Wednesday vowed to take "countermeasures" after the announcement.

Major auto producing countries such as South Korea are also bracing for steep USA tariffs on autos and auto parts, as Trump has ordered a national security probe into the sector, which is expected to be completed this month. "We're not seeing prices go up just yet".

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