China targets $3 billion of US goods in tariff dispute with Trump

Leigh Mccormick
March 25, 2018

Lighthizer said. "So what he has chose to do is to pause the imposition of the tariffs with respect to those countries". In January, he imposed tariffs on imported solar panels and washing machines. United States stock futures traded lower after the S&P 500 Index closed down 2.5%, the biggest drop in six weeks. Chinese officials had assumed that would keep Trump from following through on his trade threats, as he had suggested a couple of times.

Kevin Lin (林成蔭), vice president of investment consultancy Caizischool Co (財子學堂), said that while a trade war between the U.S. and China would impact the Taiwanese stock market, it is unlikely to immediately cause record fluctuations in the local market. The WTO has repeatedly drawn the ire of the administration but it could provide a resolution that avoids a trade war.

"China doesn't hope to be in a trade war, but is not afraid of engaging in one", the Chinese commerce ministry responded in a statement. Trump, on March 8, signed proclamations to impose a 25 per cent tariff on imported steel and a 10 per cent tariff on aluminium, causing mounting dissent among business groups and trading partners around the world.

That list will include aerospace, information and communication technology, and machinery, according to a USTR fact sheet.

It retaliated on Friday afternoon with plans for more than $4 billion in tariffs on U.S. pork, aluminium, wine and other products. However, officials have promised to continue to open Chinese markets to foreign companies.

In a separate and potentially bigger dispute, the ministry criticized Trump's decision Thursday to approve a possible tariff hike on Chinese imports worth up to $60 billion over Beijing's technology policy.

"This is an opening gambit by China, signaling 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.

China appears to be breaking WTO rules by denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends, the USTR said.

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Earlier on Friday, US President Trump signed an order that could also result in restrictions on Chinese investment in the US, saying it would be the "first of many" trade actions. "Our country must stand up against China's trade blackmail, so I am encouraged that the administration is focused on protecting the technologies that China publicly targeted", Wyden said.

Speaking from the White House, President Trump tied his decision to a 7-month investigation into how Chinese firms routinely steal U.S. intellectual property. They said the figure was based on a calculation of the impact on the profits of United States companies that had been forced to hand over intellectual property as the price of doing business in China. "We will retaliate. If people want to play tough, we will play tough with them and see who will last longer", Chinese ambassador Cui Tiankai said in a video posted to the embassy's Facebook page.

"So for every one American worker who will be pleased at Mr. Trump's announcement of tariffs, there will be ten American workers whose own products in his or her factory will be affected by the cost of the tariff", the scholar added. "I just worry if it gets really ugly, they may go for the nuclear option".

Still, it is unclear under what terms China and the US are willing to talk, with Beijing adamant that the USA tariffs constitute a unilateral move that it rejects.

The latest actions taken by Washington and Beijing increase the likelihood of a full-blown trade conflict between the two countries, with analysts voicing concern that the moves will add to global trade tensions. "I would say that there is still no consensus".

It's a trade "spat", not a trade war, and most economists agree it's unlikely to do much, if any, damage to the $19.4 trillion US economy.

China's claims in the South China Sea, through which about $5 trillion USA in ship-borne trade passes each year, are contested by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. "That process has failed".

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