China to impose $34bn tariffs before the USA as trade dispute escalates

Jermaine Castillo
July 5, 2018

It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars worth of Chinese imports on July 6.

US companies ranging from whiskey distilleries to automakers like Ford and Tesla could be hit if China ramps up retaliatory measures.

In Beijing, Foreign Ministry spokesman Lu Kang said on Tuesday the Chinese government was merely fulfilling its duty to warn travellers of "potential dangers".

"We put a halt on all investment, not just because we will be losing money, but because we don't know if growing in the United States is the right move if we won't be an exporting country", Ken Maschhoff, co-owner of the country's largest family-owned pork producer, told CNBC.

"US measures are essentially attacking global supply and value chains".

As the world's most powerful economy, the U.S. plays a vital role in global economic and trade rule-setting and it is always able to find seemingly plausible reasons for its initiative targeting China.

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"We don't know if this offer to open up is genuine yet", a third European Union diplomat said.

"We will continue to assess the potential impact of the USA -initiated trade war on companies and will help companies mitigate possible shocks".

Yesterday, the EU's top two officials warned about greater trade tensions with the U.S. as Mr Trump weighs tariffs on foreign cars after irking American allies with metal-import levies.

As a possible follow-up, the U.S. has a public hearing scheduled for July 24 to weigh tariffs on $16 billion worth of Chinese goods including machinery and plastics.

Transit trade, which refers to goods shipped from other countries to the USA via China, which is calculated by the United States as imports from China, also accounts for the trade deficit figures the Trump administration cites, something it refuses to acknowledge.

President Donald Trump has accused China of unfairly acquiring us technology and limiting market access for finance and technology firms - claims that China denies. A USA agency under the Department of Commerce recommended Monday against giving operating licenses to China's largest telecom carrier, citing national security risks posed by the state-run firm.

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The widely-read Global Times tabloid said in an editorial that China must prepare for containment by the United States. "But the country will encounter more barriers in future development, to which we should learn to adapt", it said.

The Trump administration has accused China of using predatory tactics in a lawless drive to overtake America's technological supremacy.

While Trump touts announcements of jobs created in steel plants due to the tariffs, manufacturing industries warn many more jobs will be lost in companies producing autos, auto parts, appliances and other goods that depend on imported components.

Starting Friday, the US will tax 818 Chinese products, worth $34 billion a year, from the original list. The South China Morning Post said China is likely to cancel orders for 1.1 million tons of soybeans from the USA this year.

A senior Western diplomat told Reuters that there was no sign of any talks at the moment between the two countries, even via back channels.

"Dollar demand burden arising from trade with China would be lifted from our foreign exchange reserves", they said, adding that initial Yuan trades could be small.

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