Trump slaps tariffs on China, triggering swift retaliation
US President Donald Trump warned in a statement of 'additional tariffs' if China hits back with tit-for-tat duties on American goods and services exports.
Washington - US would begin collecting duties on 818 Chinese imports valued at $34B as of July 6
US President Donald Trump on Friday announced tariffs of 25 per cent targeting tens of billions in Chinese imports, sparking immediate retaliation from Beijing and bringing the world's two largest economies to the brink of an all-out trade war feared by markets and industry.
Making good on a pledge to punish the alleged theft of American intellectual property, Trump warned in a statement of "additional tariffs" if China hits back with tit-for-tat duties on American goods and services exports.
At least initially, though, the new tariffs will not cover the full $50 billion in trade that the White House had threatened in March.
US Trade Representative Robert Lighthizer said on Friday the United States would begin collecting duties on 818 Chinese imports valued at $34 billion as of July 6.
A second tranche of 284 goods valued at $16 billion - which would bring the total to $50 billion - will undergo an additional process of review and public comment, according to the trade representative's office.
"The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices," Trump said in the statement.
"These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs."
China responded swiftly, saying it has imposed "equal" tariffs on US products.
"We will immediately launch tax measures of equal scale and equal strength," the Ministry of Commerce said in a statement on its web site which also called on other countries to "take collective action" against this "outdated and backwards behavior."
The announcement caps months of sometimes fraught shuttle diplomacy between Washington and Beijing, in which Chinese offers to purchase more US goods failed to assuage Trump's grievances over the soaring US-China trade imbalance and Beijing's industrial development policies.
But Trump's China trade offensive is only one side of his multi-front confrontation with all major US economic partners.
Trump outraged Canadian, Mexican and European leaders last month by imposing punishing tariffs on imports of steel and aluminum to protect American producers from allegedly unfair competition.
US officials say Beijing has sought industrial dominance in the emerging technologies through the theft of American know-how through forced technology transfers, hacking and other forms industrial espionage.
The release of goods lists also comes after jockeying by American companies dependent on certain imports who sought exemptions for certain goods - a process that is due to continue with the second, $16 billion tranche of Chinese imports.
The trade representative's office acknowledged public concern that the tariffs list could raise prices for consumers.
"The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions," the office said.
Beijing and Washington have held three rounds of high-level talks since early May that have yet to yield a compromise. Trump has been unmoved by a Chinese offer to buy an additional $70 billion worth of US farm and energy products and other goods, according to people familiar with the matter.
"The threshold to come to a consensus or a compromise seems high," Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management wrote in a note.
Renewed worries about an escalating trade conflict sent shares in Chinese telecoms gear maker ZTE tumbling on Friday. The company has lost 30 per cent of its market value since resuming trade this week.
ZTE last week agreed to pay a $1 billion fine to the US government to end a crippling supplier ban imposed after it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.
Trump's revised tariff list may exclude some consumer items from an earlier proposal to focus more on goods related to Beijing's "Made in China 2025" programme, according to a Eurasia Group report.
'Trade tensions will be long-lasting'
The "Made in China 2025" initiative is aimed at accelerating China's prowess and narrowing its competitiveness gap with the United States and other industrial powers in key technologies such as robotics and semiconductors.
While China has in recent months made incremental market-opening reforms in industries for which critics in the foreign business community say they were already planned, it has shown no inclination to yield on its core industrial policies.
"US-China trade tensions will be long-lasting," Yifan Hu, regional chief investment officer and chief China economist at UBS Wealth Management, told a briefing in Beijing.
"The trade skirmish is not just about the trade deficit and exchange rates, but about the rules of the game, market openness and intellectual property. It is also about values, governance and geopolitical disagreements," she said.