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


Still, the administration's hard-line stance on China is stirring doubts among congressional Republicans and business leaders, who fear it may rupture profitable commercial relations. Year-on-year, the growth of China's exports to the USA slowed to 11 percent last month from 12.5 percent in June, while import growth accelerated to 11 percent from 9 percent.

China has repeatedly warned it will strike back against any further punitive measures by Trump, saying the United States is threatening the global free trade order with its protectionism.

The taxes were the second tranche of a planned $50 billion package that began on July 6 when the United States slapped duties on $34 billion in Chinese goods, provoking a dollar-for-dollar response from Beijing.

July figures showed the US' trade deficit with China decrease only slightly.

Several large American companies have said they would adjust their supply chains to source outside of China if tariffs on Chinese goods impacted them, while China's Haier Group (1169.HK) said rising steel prices amid hefty USA import tariffs was driving up costs for its business in America.

China, however, would run out of USA imports to levy, as it bought only $130 billion worth of American goods previous year.

The trade war between the world's two largest economies rolled into a second round. "That's going to be the new reality". This is above a 10pc median average of economist predictions prepared by Bloomberg.

Due to the rising trade tension between China and the United States, the trading arm of Chinese state oil major Sinopec is said to have suspended imports of crude oil from the United States. Along with the trade spat, Chinese stocks have suffered from slowing growth in the debt-laden economy.

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After complaints by Chinese leaders, Trump agreed to reverse a USA enforcement action that would have caused ZTE, a prominent state-owned telecom company, to go out of business. But it held off on a final $16 billion as a result of concerns raised by U.S. companies.

"In general, the performance of China's retail sector was rather sluggish in July", it said, noting that a 6.5 per cent rise in cosmetics sales was the one bright spot.

The US is now considering tariffs on another $200bn in goods, including consumer products that were spared duties in the initial $50bn round.

"This is a very unreasonable practice", the Chinese commerce ministry said of the US action on Wednesday as it rolled out China's counter-tariffs.

A spokeswoman for the U.S. Trade Representative's office could not immediately be reached for comment on China's retaliation announcement or whether this would trigger Trump's next round of threatened tariffs on $200 billion worth of Chinese goods. The new list covers products ranging from motorcycles to steam turbines and railway cars.

Administration officials believe that the $505 billion Americans spend on Chinese products each year gives them leverage over China.

Customs officials will begin collecting the border tax August 23, the Office of the U.S. Trade Representative said.

But the Chinese government can employ other tools if the conflict continues. It would likely have to impose penalties on US companies doing business in China to make up the difference. It would take a few more weeks to revise the list and make programming changes at U.S. Customs and Border Protection to begin collecting the duties.