Vietnam Time

7/6/2018 12:05:13 PM

Trump unleashes trade war with latest tariffs on China

Punishing U.S. tariffs on Chinese imports took effect early Friday (July 6), marking the start of President Donald Trump's trade war with the largest U.S. trading partner and intensifying the anxieties of global industry.

A shipping container is offloaded from the Hong Kong based CSCL East China Sea container ship at the Port of Oakland on June 20, 2018 in Oakland, California. (Photo: AFP/Getty Images North America/Justin Sullivan)

Beijing was expected to immediately retaliate dollar-for-dollar with its own counter-tariffs after Trump imposed 25 per cent duties on about USD 34 billion in Chinese machinery, electronics and high-tech equipment including autos, computer hard drives and LEDs.

The arrival of the long-threatened tariffs marked the failure of months of dialogue between the world's two largest economies and came amid hand-wringing from industry leaders who fear shrinking markets, higher prices and slower growth.

The tariffs' arrival 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.

U.S. officials accuse China of building that country's emerging industrial dominance by stealing the "crown jewels" of American technological know-how through cyber-theft, forced transfers of intellectual property, state-sponsored corporate acquisitions and other alleged practices.

And they say the current U.S. economic strength, as well as America's soaring trade deficit in goods, means the world's largest economy can outlast its rivals in the current tit-for-tat battle, presenting Washington with a rare window of opportunity to settle old scores.

The U.S. trade deficit in goods with China ballooned to a record USD 375.2 billion last year, further stoking Trump's ire.

But it remained to be seen whether the American president would carry out recent threats to respond to any Chinese retaliation with maximum pressure - raising U.S. duties on Chinese goods in increments of USD 200 billion until virtually all the goods America buys from its largest trading partner are subject to duties.

But, aboard Air Force One on Thursday en route to Montana, Trump erased any hope of an about-face. He said Washington stood ready to slap duties on hundreds of billions more in Chinese imports once Friday's tariffs took effect.

Chart showing the 2017 value of sectors that will be hit by President Donald Trump's first round of 25 per cent tariffs on Chinese goods. (Photo: AFP/John SAEKI)

RED STATES FEEL THE PINCH

As the tariffs' start approached at midnight, the U.S. central bank warned Thursday the impending trade battle was beginning to darken the otherwise blue skies of the robust American economy, now starting its 10th year of recovery.

Businesses around the United States told the central bank that spending plans had been scaled back or postponed and they also warned of further adverse effects from the trade conflict, according to a Federal Reserve survey.

An industrial survey confirmed that companies were white-knuckling their way through Trump's intensifying, multi-front trade assault.

"We're starting to see signs of inflation, not sharp inflation, but definitely inflation," Anthony Nieves, head of a services industry survey committee for the Institute for Supply Management, told reporters on Thursday.

The powerful U.S. Chamber of Commerce, a principal corporate lobby, said this week that retaliation from China, Canada, Mexico, the European Union and others against Trump's tariffs was already affecting USD 75 billion in U.S. exports./.

VNF/AFP  
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