Trump's China Trade War Just Escalated by $16 Billion

Trump going ahead with taxes on $16B in Chinese imports

President Trump had repeatedly expressed discontent over the U.S. trade deficit with China, accusing the country of unfair trade practices, intellectual property theft, currency manipulation, and of providing state aid to Chinese firms.

The Chinese government responded and said Beijing will also slap additional import tariffs of 25% on $16 billion worth of United States goods ranging from oil and steel products to autos and medical equipment. On July 6, the US began taxing the 818 goods, worth $34 billion, remaining from the April list.

However, President Trump is also engaged in trade disputes with other countries, such as Canada and Mexico, and has imposed separate tariffs on items that include steel and aluminium, washing machines and solar panels.

"We expect export growth to cool in the coming months, though this will primarily reflect softer global growth rather than United States tariffs, the direct impact of which will continue to be mostly offset by the renminbi's (yuan's) recent depreciation". Last year, China imported about $130 billion of US goods.

"There is no off-ramp, and Trump has given China little wiggle room to save face and come to the bargaining table", he said.

Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment.

After months of escalation, business communities in both countries are wondering when and how the trade confrontation will end.

Beijing is expected to hit $16 billion worth of U.S. goods with equal tariffs in response to Tuesday's move.

A US-China trade war will reduce global output by 0.7 percent by 2020, with China's economy taking a 1.3 percent hit and US GDP dropping 1 percent, Oxford Economics said in a research note Tuesday, before the new list was released.

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The US will begin imposing 25% duties on an additional $16 billion in Chinese imports in two weeks, escalating a trade war between the world's two biggest economies.

The Office United States Trade Representative (USTR) announced the tariffs in a statement released on Tuesday afternoon US time. There is a mandatory 60-day comment period for industries to ask for exemptions from the tariffs.

Americans import far more from China than the other way around, however, meaning Beijing may at some point need to look for other means of retaliation.

Wednesday's knee-jerk reaction to the announcement of the tariffs was a typical move by traders.

June 15: Trump rolls out thefinal list of goods subject to new tariffs. Schneider National Carriers Inc. and other firms testified during a hearing July 24-25 in Washington that there are no U.S. manufacturers and that the containers are nearly exclusively made in China.

Negotiations broke off after the Trump administration imposed the tariffs on $34 billion in Chinese imports, a move the Chinese said would void any promises they'd made in negotiations.

Washington imposed 25% duties on $34bn (£26.3bn) of Chinese goods on 6 July in response to those complaints. The Trump administration has been warned that its latest attack could hurt American companies.

China's Commerce Ministry called the USA decision to place the latest round of tariffs on Chinese goods "unreasonable", and said it chose to take counter measures, matching the tariffs in percentage and value.

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