The unintended consequences of Trump’s trade war with China

The unintended consequences of Trump’s trade war with China

When it comes to China, Trump believes Beijing is using "unfair" trade practices to gain an advantage on the United States, including lax observation of intellectual property law.

China said Friday it had already imposed retaliatory measures on U.S. goods, moving immediately after Washington implemented tariffs on Chinese goods at the stroke of midnight.

Beijing had said it would retaliate with punitive measures on U.S. products worth a similar amount, including soybeans, pork and cotton, but it had not officially confirmed that they had taken effect.

The U.S. and China on Friday launched tit-for-tat tariffs on each other's imports, the opening shots in what Beijing called "the largest trade war in economic history".

"China promised that it would not fire first, but it has been forced to take necessary measures to defend the core interests of the country and its people", the statement said.

The direct impact of the imposed tariffs on the two countries' economic growth will be modest because the value of goods involved accounts for only a sliver of bilateral trade, but the impact on targeted industries will be significant, some analysts said.

China's government also announced it was adding this round of United States tariffs to an existing complaint filed with the WTO in April shortly after Washington unveiled the threat to punish Beijing for its policies on intellectual property. Part of his plan is to radically change how U.S. trade deals work and to focus on protecting the domestic economy.

Both sides showed signs of digging in further as the tariffs went into effect.

The administration accuses China of using predatory practices in a push to overtake US technological dominance.

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Since then, the sides have traded salvos, with the USA focusing its import duties on high-tech equipment while China has targeted products like cars, soybeans, and lobsters - many of which are produced in areas of the us that voted for Trump. The cumulative goods trade deficit with China through the first five months of the year totaled $152.2 billion, compared with $138.5 billion in the same period last year.

Trump's tariffs on the EU, Canada and Mexico are for as much as 25% on imports of steel and aluminium, which the USA has imposed on grounds of national security.

The back-and-forth trade battle between the world's two largest economies will likely be damaging to the USA economy according to trade experts, ths fact was not lost on the Chinese.

"And that's going to impact the stock market".

China's commerce ministry said it had lodged a new complaint with the World Trade Organization (WTO).

"While China's trade behavior is troubling, diplomacy through constructive bilateral processes can achieve the desired objectives without the disproportionate harm to the U.S.", Chandler suggested in a post on the CTA website. The yuan, which has weakened sharply against a broadly strong US dollar in recent weeks, was trading at 6.6480 per dollar as of 4:30 p.m. It accused the United States of "typical trade bullying".

One seller pointed out that exporters of US-made goods might be impacted through retaliatory tariffs. "But it is applying the brakes to a global economy that has less durable momentum than appears to be the case", Rob Carnell, chief economist at ING, said in a note to clients. Americans worry that rising Chinese technological prowess might erode US industrial leadership and prosperity.

'There should be no doubting Beijing's resolve, ' the newspaper said.

Longer term though a trade war posed a risk to the recovery of the whole global economy, he said.