The Trump administration raised the stakes in its trade dispute with China, threatening 10 per cent tariffs on a list of $200 billion worth of Chinese imports, sending stocks lower and prompting Beijing to warn it would be forced to respond.
China’s commerce ministry said on Wednesday it was “shocked” and would complain to the World Trade Organization, but did not immediately say how it would retaliate. In a statement, it called the US actions “completely unacceptable”.
Beijing has said it would hit back against Washington’s escalating tariff measures, including through “qualitative measures,” a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts, according to a Reuters report Wednesday.
The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such US measures.
On Tuesday, US officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum, prompting criticism from some US industry groups.
It also includes consumer goods ranging from car tires, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
“For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” US Trade Representative Robert Lighthizer said in announcing the proposed tariffs.
“Rather than address our legitimate concerns, China has begun to retaliate against US products ... There is no justification for such action,” he said in a statement.
Last week, Washington imposed 25 per cent tariffs on $34 billion of Chinese imports, and Beijing responded immediately with matching tariffs on the same amount of US exports to China. Each side is planning tariffs on a further $16 billion in goods that would bring the totals to $50 billion.
MARKETS RATTLED
Investors fear an escalating trade war between the world’s two biggest economies could hit global growth and damage sentiment.
On Wednesday, the MSCI’s broadest index of Asia-Pacific shares outside Japan was down about 1 per cent, while the main indexes in Hong Kong and Shanghai recovered somewhat after falling more than 2 per cent.
S&P 500 and Dow futures dropped around 1 per cent, pointing to a weak opening on Wall Street later on Wednesday.
The onshore yuan tracked its offshore counterpart lower with traders closely watching the key 6.7 per dollar level as pressure mounted on the currency.
US President Donald Trump has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of US imports from China last year.
The new list published on Tuesday targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms and increasing the stakes for lawmakers in Trump’s Republican party facing elections in November.
The list is subject to a two-month public comment period before taking effect.