It’s on: US, China tariffs take effect in new trade war

Beijing accused the U.S. of starting the "largest trade war in economic history".

Washington imposed 25 percent duties on $34 billion of imports from China in the first in a possible series of increases that President Donald Trump says could affect up to $550 billion of Chinese goods.

China's Ministry of Commerce said Friday in a statement that the U.S. had launched "the largest trade war in economic history".

"After the United States activated its tariff measures against China, China's measures against the USA took effect immediately", said Lu Kang, spokesman for the foreign ministry.

USA tariffs on more than 800 goods from China worth $34 billion took effect at 0401 GMT while China's commerce ministry said in a statement shortly after the deadline passed that it was forced to retaliate, meaning $34 billion worth of imported us goods including autos and agricultural products also faced 25 percent tariffs.

"We are forced to make a necessary counterattack to protect the core profits of the country and the interests of people", it said in expressing readiness to take reciprocal measures against the United States.

Economists have warned that the escalating trade frictions could throttle global growth.

The trade war may have just started, but China has already been making moves in the soybean world as US shipments originally destined for the nation have been canceled or rerouted.

After that, the hostilities could intensify: Trump said the U.S.is ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing refuses to yield to US demands and continues to retaliate. Part of his plan is to radically change how United States trade deals work and to focus on protecting the domestic economy.

That would add to disputes underway with Canada, Mexico and the European Union, which could worsen if he goes ahead with threatened tariffs on autos.

Xi's government has expressed confidence China can hold out against USA pressure, but companies and investors are uneasy.

"But it's the risk of escalation - specifically Trump's $500 billion dollar threat, which would cover almost all of China's exports to the USA - that has analysts anxious", Yanmei said.

"A trade war is the last thing we want to see, because we said many times that no one will benefit from a trade war", said Chinese foreign ministry spokesman Lu Kang.

Gao said China would not bow to threats or blackmail and would have to fight back if the USA went ahead and imposed the tariffs.

China's commerce ministry said it had lodged a new complaint with the World Trade Organization (WTO). The yuan, which has weakened sharply against a broadly strong USA dollar in recent weeks, was trading at 6.6480 per dollar as of 4:30 p.m.

The impact is already being felt in the markets.

The overall monthly USA goods and services trade deficit declined to $43.1 billion in May, from $46.1 billion in April.

Trump repeatedly has slammed what he describes as Beijing's underhanded economic treatment of the United States.

"For soybean producers like me this is a direct financial hit", Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade. Gregory Daco, head of USA economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 percent through 2020.

Later in the day, the Chinese Commerce Ministry said it had filed a challenge against the additional US tariff implementation with the WTO.

But Trump has said his administration will respond to retaliation from Beijing with much bigger waves of tariffs, raising the prospect of worsening tit-for-tat reprisals.


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