Extent of US-China trade fight depends on Trump's goals, experts say

Kelvin Reese
March 26, 2018

"China urges the US to resolve China's concerns as soon as possible, resolve bilateral differences through dialogue and consultation, and avoid damage to the broader array of Chinese-US cooperation". "It is a typical unilateral and protectionist practice", said a spokesperson with China's Ministry of Commerce (MOC).

China pledged on Sunday to press ahead with market opening and reforms while reiterating that it will treat domestic and foreign firms equally and protect intellectual property rights. "China does not want to fight a trade war, but it is absolutely not afraid of a trade war", the commerce ministry said. On Thursday, he said the WTO was "a disaster for us" and insisted its arbitrations were "unfair" to the U.S.

But the move sent stocks diving on Wall Street, where the Dow Jones Industrial Average was down about two per cent ahead of the announcement and ratcheted up Trump's campaign of confrontation with trading partners.

"We have a tremendous intellectual property theft situation going on", Trump told reporters.

Another administration official said China benefits far more from the US-China trade relationship than the US does.

"When you start hurting this big segment of the economy from the people that gave him a lot of support in the election, I think it's going to hurt him". On Amazon, more than half of product listings come from smaller businesses that source from China, which Huang said would be hit hard. Several economists estimated that the Trump administration's plan to slap tariffs on as much as $60 billion of Chinese products would trim China's economic growth rate-targeted at about 6.5% this year-by 0.1 percentage point if put into effect.

Fighting words from Chinese officials reflected their ire at Trump's tariffs package and at his apparent willingness to launch a trade war with the world's second-largest economy.

Meanwhile, American stocks sank again for the second straight day, giving Wall Street its worst week in two years, as fear gripped investors that China and the USA were headed for a trade war. "There's a long-term pattern of behavior by the Chinese government to the detriment" of US companies, the USA official said at a briefing. "We will certainly take that into account", the official said.

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The Trump administration said that it is for China to decide what course it wants to take.

Chinese officials have suggested specifically targeting industries in areas of the US with large percentages of Trump supporters, such as the Farm Belt, according to people familiar with the discussions.

"China's market receives the largest number of U.S. planes and soybeans and the second largest number of United States cars and cotton".

The Chinese move appeared to be a warning shot aimed at increasing domestic US pressure on Trump by making clear which exporters, including farm areas that voted for the president in 2016, might be hurt.

China's petrochemical market keeps growing, and it needs cooperation and collaboration with global petrochemical agencies and companies, he added. "Is it fair? How many toys do we have to sell to equal the value of one Boeing plane?"

China said it would raise tariffs in two phases, slapping an additional 15 flawless on 120 goods worth almost $1bn if the United States fails to reach a "trade compensation agreement" within an unspecified timeframe. The White House has also said that America's massive trade deficit with China is estimated to have resulted in about two million job losses in the US.

Market access to aged care, education and healthcare and financial services sectors would be widened, and limits on foreign equity lifted in some areas.

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