The US and China have fired the next shots in their escalating trade war, with Washington threatening to impose fresh tariffs on another US$200 billion of Chinese goods and Beijing vowing to retaliate.
The latest moves in the ballooning trade conflict came days after tit-for-tat duties on US$34 billion in goods came into effect.
US Trade Representative Robert Lighthizer late on Tuesday accused China of retaliating to its tariffs “without any international legal basis or justification.”
US President Donald Trump has therefore ordered the Office of the US Trade Representative to “begin the process of imposing tariffs of 10 percent on an additional US$200 billion of Chinese imports,” Lighthizer said in a statement.
Officials are late next month to hold hearings on the list of targeted products and an administration official said it would take about two months to finalize, at which point Trump would decide whether to go ahead with the levies.
The eventual goal is to impose tariffs on 40 percent of Chinese imports, the same proportion of US goods hit by Beijing’s retaliation, an official told reporters.
Reacting to the “totally unacceptable” Washington list, the Chinese Ministry of Commerce said it would be forced to take “countermeasures.”
“The behavior of the US is hurting China, hurting the world and hurting itself,” the ministry said in a statement, adding that it was “shocked” by the US’ actions.
“To safeguard the core interests of the country and the fundamental interests of the people, the Chinese government as always will have no choice but to take the necessary countermeasures,” it added.
Beijing said it would “immediately” tack the case onto its suit against Washington’s “unilateralist” behavior at the WTO.
At a forum in Beijing, a senior official accused the US of “damaging the world economic order” and said tit-for-tat tariffs would “destroy” trade between the rival powers.
“The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade,” Chinese Assistant Minister of Commerce Li Chenggang (李成鋼) said.
The new trade frictions sent investors running for cover, with equity markets across Asia tumbling more than 1 percent.
The benchmark Shanghai Composite Index led the declines, dropping 1.76 percent. Hong Kong’s Hang Seng Index dropped 1.29 percent, while Tokyo’s Nikkei was off 1.19 percent.
“The market didn’t expect the second round of tariffs would come so quickly and it has impacted investor sentiment,” Central China Securities Co (中原證券) analyst Zhang Gang (張剛) said.
For now, the US trade office continues to work on the process of finalizing an additional US$16 billion of goods to face 25 percent tariffs to bring the total up to US$50 billion. Beijing has vowed to retaliate accordingly.
The new list of goods to face 10 percent punitive duties includes frozen meats; live and fresh fish and seafood; butter, onions, garlic and other vegetables; fruits; nuts; metals; and a massive list of chemicals; as well as tires, leather, fabrics, wood and paper.
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