Beijing accused Donald Trump of "trade bullying" as it imposed retaliatory tariffs against new US duties on $34 billion of Chinese imports on Friday in the biggest escalation yet in a trade war between the world's two largest economies.
The consequences of a trade war that could threaten global supply chains have alarmed governments and multinational corporations around the world. But Mr Trump has continued to raise the stakes, threatening to extend levies to all $500 billion of goods imported from China in a blunt outline of his plans to escalate the fight.
“This act is typical trade bullying,” China’s ministry of commerce said on its website on Friday, adding that it “seriously jeopardises the global industrial chain [and] hinders the pace of global economic recovery”.
Ahead of the implementation on Friday of tariffs on 818 different product categories of imports from China, ranging from electric cars to industrial lathes, Mr Trump reiterated his plans to continue to squeeze China in the months ahead.
A further $16 billion in imports would be targeted in the coming weeks and, if China continued to retaliate, a further $200 billion would follow. “And then after the $200 billion, we have $300 billion in abeyance, okay?” he told reporters on Thursday. The $500 billion threat would cover almost all US imports from China, which reached $505.5 billion in 2017.
Farm and energy
In retaliation, China is targeting US farm and energy exports, including soya beans, a top export of US states that supported Mr Trump, and crude oil.
US officials pointed to robust American employment numbers published on Friday as a sign that the domestic economy could weather any short-term negative consequences of a trade war. They also continued to insist that Mr Trump was out to provoke US trading partners like China into negotiations to mend years of trade imbalances that have hurt American workers.
The US in June added 213,000 jobs, including 36,000 jobs in the manufacturing sector at the heart of Mr Trump’s trade efforts. It also saw 600,000 people rejoin the labour force.
But business groups in the US insist they are already beginning to feel the pain of Mr Trump’s aggressive trade policies, which have been raising input costs for businesses and are likely to lead to lay-offs.
– Copyright The Financial Times Limited 2018
