Washington/Beijing: China on Saturday struck back against US President Donald Trump’s trade offensive, intensifying the expanding and unpredictable dispute between the world’s two largest economies.
China announced it was expanding its existing complaint against the US at the World Trade Organisation, hours after the countries slapped tit-for-tat tariffs on billions of dollars of cross-border trade.
Beijing called the new stage of the confrontation — which began when Washington pulled the trigger on 25 per cent duties on $34 billion annual imports of Chinese machinery, electronics and other goods — “the largest trade war in economic history.”
China’s foreign ministry said retaliatory tariffs of equal size and scope had taken effect “immediately.” There was confusion about exactly what US products would be hit in the initial wave of tariffs as China’s Commerce Ministry had not published an updated list.
Economists have warned escalating trade frictions could throttle global growth and strike at the heart of the world trading system, causing shockwaves across the planet and potentially disrupting years of economic growth.
US trade data released on Saturday showed exporters hit a record, as importers bumped up purchases, particularly of tariff-targeted US soy beans, to build up supplies before the new duties hit.
Analysts said this was the quiet before the storm, with US exports likely to fall off in the third quarter as both sides feel the effects of worsening trade relations.
The new tariffs could just be the opening skirmish in the trade war, as US President Donald Tru-mp has vowed to hit as much as $450 billion in Chinese goods, the vast majority of that country’s imports. That would add to disputes underway with Canada, Mexico and the European Union, which could worsen if he goes ahead with threatened tariffs on autos.
China’s government also announced it was adding this round of 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.
Months of dialogue between the two economic superpowers, including in the WTO, appeared to have failed, with Trump warning just hours before the tariffs came into effect that Washington was ready to escalate the dispute with duties on hundreds of billions of dollars more in Chinese imports.
Trump repeatedly has slammed what he describes as Beijing’s underhanded economic treatment of the US. The US trade deficit in goods with China ballooned to a record $375.2 billion last year, stoking his ire.
US officials accuse China of building its industrial dominance by stealing the “crown jewels” of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions.
With only $130 billion in US imports to retaliate against, Beijing has said it will take “qualitative” and “quantitative” measures against the US, triggering fears it could cripple the operations of US MNCs operating there.
