USA invokes new tariffs on China, launching full-fledged trade war

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Speaking to reporters late Thursday en route to a campaign-style rally in Montana, just before tariffs on U$34 billion worth of Chinese imports were set to go into effect, Trump said there are more to come.

Mounting jitters in recent weeks over a stepped-up trading dispute between the world's two largest economies had weighed on the markets well ahead of Friday, when Beijing and Washington launched dueling tariffs on billions in goods.

When it comes to China, Trump believes Beijing is using "unfair" trade practices to gain an advantage on the USA, including lax observation of intellectual property law.

"China promised not to fire the first shot, but to defend national core interests and the interests of the people; it has no choice but to strike back as necessary", said the commerce ministry in a statement. Unlike the TPP, the United States is not a party to these negotiations - but China is.

With the United States and China finally formalizing tit-for-tat import tariffs, Wall Street is gearing up to dissect USA corporate earnings in the coming weeks for signs of a trade war impact and whether it will affect spending plans.

Alas, the tariffs going into effect Friday will probably punish us and our allies more than they'll hurt China. -China Business Council in Beijing.

Reprising the tactic he used against steel and aluminum imports, Trump in May ordered the Commerce Department to investigate whether imported vehicles and auto parts pose a threat to US national security that justifies tariffs.

President Donald Trump already is threatening additional rounds of tariffs, possibly targeting over $500 billion worth of Chinese goods, or roughly the total amount of US imports from China previous year.

It is also unclear whether they considered how their actions might encourage closer trade relations between China and the European Union (which are being discussed), or China and other Asia Pacific economies (also being negotiated). "I think products made in China are the best", said one shopper in a Beijing grocery story, who gave his name as Yang.

"You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200bn in abeyance and then after the $200bn, we have $300bn in abeyance. OK?" The US trade deficit in goods with China ballooned to a record $375.2 billion previous year, stoking his ire. What galls them most is the president's justification: Using a little-used weapon in US trade law, he has declared that the imported metals are a threat to America's national security.

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Some Chinese ports had delayed clearing goods from the United States, four sources said on Friday.

Washington slapped the first round of the new tariffs on bilateral imports worth $50 billion for alleged intellectual property and technology theft, while Beijing quickly struck back on an equal amount of American products.

Those retaliatory tariffs are slated to take effect Friday, after Trump's tariffs go into effect. President Trump's tariffs and China's fighting response suggest as prolonged impasse.

"For companies with supply exposure to tariffs, they will move sourcing country of origin if they can; if they can't, they'll pass on as much of the tariff cost as they can, or see a cut in margins", said Jacob Parker, vice president of China operations at the U.S.

The strength and size of both economies means the fight could rage on for years.

As many economists have noted, there are winners and losers in trade wars.

"If this continues, the Chinese will just look elsewhere and build either indirectly or directly, additional investments to meet their domestic demand and we could conceivably", he said, "lose that market forever".

But reaching a deal that's palatable to both sides will be tough.

For its part China hit the USA with retaliatory tariffs on Friday, but is also vowing "qualitative measures" to squeeze the US economy.

Analysts say China is unlikely to budge on those plans, which it sees as crucial for developing its huge economy.

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