Weapons of trade war: What might China have up its sleeve?

Trump's Trade War Officially Begins - Hit & Run : Reason.com

On Friday, the Trump administration is slated to unilaterally impose tariffs on $34 billion worth of Chinese goods.

"You saw with China, $50 billion and another $200 billion frankly is waiting", he said at the rally in Great Falls, Montana, referring to envisaged additional 10 percent tariffs on $200 billion in Chinese imports.

The first round of these tariffs were due to take affect at 4pm NZT.

China's soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses, amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.

These initial tariffs are unlikely to inflict serious harm to the world's two biggest economies.

The office of the US Trade Representative announced a product exclusion process for Chinese products subject to Section 301 tariffs, seeking to soften the blow on US companies a little.

Trump, who announced the United States starting to collect tariffs on $34 billion worth Chinese goods after midnight Thursday, warned that subsequent rounds could see tariffs on more than $500 billion of goods, or roughly the total amount that the USA imported from China past year.

Businesses will have to pay 25 percent additional tax on $US34b of certain Chinese products they import - including aircraft tyres and commercial dishwashers.

Because products that are made in China - from Apple products to Nike ones - are going to get expensive, and be more expensive on the shelves of Walmart for everyday American consumers. But it was also explicitly about containing China's influence, and preventing Beijing from writing the "rules of the road" on intellectual property, labor and environmental standards.

It's the first time the United States has imposed tariffs directly aimed at Chinese goods following months in which Trump accused Beijing of stealing American intellectual property and unfairly swelling America's trade deficit.

"Increased tensions in the US-China economic relationship will negatively impact ... operations in China", William Zarit, chairman of the American Chamber of Commerce in China, said in a statement Friday. China, whose economy has grown tenfold since it joined the World Trade Organisation in 2001, poses a much more formidable adversary.

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Trump's protectionism has "already caused criticisms and worries across the board", Chinese Foreign Ministry spokesman Lu Kang told reporters.

Lobbying efforts are now focused on convincing President Donald Trump to not put tariffs on a second list of mainly energy, plastics and chemicals worth about $16 billion, said industry officials.

What could the fallout be?

Canatella says since the trade dispute began, he's lost about $100,000 dollars just because of market uncertainty.

Under a full-blown trade war in which the US slaps 10 percent tariffs on all other countries and they respond, the economists reckon USA growth would slow by 0.8 percentage point by 2020.

Months of dialogue between the two economic superpowers appeared to have failed, with Mr. Trump warning just hours before the tariffs came into effect that Washington was ready to target more Chinese goods.

BMW said it could not absorb all of the 25% tariff on the cars it exports to China from a plant in Spartanburg, South Carolina and would have to raise prices.

There are already signs within the United States that companies are pausing decisions on investment and hiring and input costs flowing from the earlier increase in duties on steel, aluminium and washing machines are flowing through to higher end-prices. "For example, world-leading semiconductor companies are upset that chips made in the US and sent to China for assembly or testing will face a high tariff on their total value when they return".

"China can impose leverage in areas outside the economic sphere".

The Trump administration contends China has deployed predatory tactics in a push to overtake United States technological dominance.

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