China prepares to hit back at Trump's tariffs; stocks keep falling

AFP | Chinese workers transfer bags of soybean meal at a port in Nantong in China's eastern Jiangsu province

China on Friday declared plans to levy additional duties on up to $3 billion of USA imports, including fruit and wine, in response to US import tariffs on steel and aluminium, imposed after a separate USA probe.

China may impose $3 billion ($2.4 billion) in tariffs on a range of U.S. products in response to USA tariffs on Chinese steel and aluminum, the Chinese Commerce Ministry said Friday. The following day, Beijing hit back, saying it would levy 15 per cent tariffs on 120 types of USA products, including fruit, wine and steel pipes, worth US$977 million, and 25 per cent tariffs on a further eight other categories of goods, including pork and recycled aluminium, worth US$2 billion, if the tit-for-tat spat was not resolved.

"It doesn't make sense to impose tariffs on USA brand products that are made for American companies to make profits", said a senior official in Sichuan Province, where iPad production has fueled economic growth.

On Friday, China unveiled tariffs on $3 billion of US imports in response to steel and aluminum duties ordered by Trump earlier this month.

"The United States is taking action at the World Trade Organization (WTO) to address China's unfair technology practices that run counter to WTO rules", the statement from the US Trade Representative's office said.

"Many countries are calling to negotiate better trade deals because they don't want to have to pay the steel and aluminum tariffs", Trump said.

"We hope the USA stops its (practices) before it is too late, makes prudent decisions, and doesn't drag bilateral trade relations into danger", said the spokesperson, adding that China is "fully prepared to firmly protect its legitimate interests". The USTR will announce the proposed list in the next "several days", according to the fact sheet. Even smaller-scale trade actions like Obama's tariffs on tires or Bush's on steel yielded more job losses than gains, studies have found.

The real issue for those making "noise" about China was about how they viewed the world and China's development, she told reporters.

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"If a trade war were initiated by the United States, China would fight to the end to defend its own legitimate interests with all necessary measures", it added.

The administration formally justified its tariffs by invoking Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on countries in violation of worldwide trade deals. The US will pay for its "arbitrary and reckless behaviour", the Chinese foreign ministry said. We have great relationships with China.

The tariffs will not take effect immediately. The U.S. military put countering China and Russian Federation at the centre of a new national defence strategy it recently unveiled.

China is not the only target market for US LNG exports.

"Currently, we are not looking to get in a negotiation again", a senior USA official told reporters in Beijing.

The World Trade Organisation's (WTO) chief on Friday said both countries should show restraint and called on governments to settle their differences through the WTO's mechanisms.

In announcing exemptions for the European Union, Argentina, Australia, South Korea and Brazil, the Trump administration has effectively narrowed the countries that it is targeting with its protectionist trade policies. "But the contrast between China's growth and its unfair trade practices, and what had happened to the United States in terms of growth and wage growth, is quite startling", the official said.

"This is an opening gambit by China, signalling that the imposition of tariffs by the U.S. will elicit what Beijing views as a proportionate retaliatory response", said Eswar Prasad, a former chief of the International Monetary Fund's China division and now a professor at Cornell University in Ithaca, New York.

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