Only 4 Days in, China-US Trade War Escalates

Broker takes order beside her colleague during afternoon trading at a brokerage in Hong Kong

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 past year.

The US said it had no choice but to move forward on the new tariffs after China failed to respond to the administration's concerns over unfair trade practices and Beijing's abuse of American intellectual property, according to two senior officials who spoke to reporters.

U.S. Trade Representative Robert Lighthizer said Washington did a thorough investigation to justify imposing tariffs on $50 billion worth of imports to compensate for the harm to the U.S. economy caused by China's unfair trading practices, including theft or forced transfer of American technology. It's unclear what that action could include. Adding $200 billion in goods to the list of existing tariffs would bring the total value of tariffed goods to $450 billion-just shy of the $505 billion in exports that China sends to the U.S. Trump had threatened this level of escalation as early as last week, before the current tariffs even went into effect.

While China does not export enough goods to the USA to match the value of the announced tariffs, combining U.S. corporate revenue inside China with exports would give America a trade surplus of US$20 billion, according to research from Deutsche Bank cited by Bloomberg.

If China responds with tariffs on energy, this could cut sales of USA energy goods, analysts and executives told Reuters last month, when Beijing first threatened to slap tariffs on us energy.

Trump has been considering tariffs against China since his officials concluded in March that Beijing violates U.S. intellectual-property rights, such as by forcing American firms to hand over technology.

'Given China's likelihood of retaliation, it's also billions worth of new tariffs on American exporters'.

The list is subject to two months of finalization and input before possible implementation by President Donald Trump.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further.


Lighthizer said the initial $50 billion in US tariffs were aimed at goods that "benefit from China's industrial policy and forced technology transfer practices".

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent.

Some U.S. business groups and lawmakers from Trump's own Republican Party were critical of the escalating tariffs.

The US on Tuesday published a list of $200 billion (€170 billion) worth of Chinese goods that could soon be hit with tariffs. "It will also result in retaliatory tariffs, further hurting American workers", a Chamber spokeswoman said.

"Unfortunately, China has not changed its behavior - behavior that puts the future of the US economy at risk.

But more tariffs like these will punish America's manufacturing workers - and could undermine our hard-won gains thanks to tax and regulatory reform".

Chinese tactics, the administration said, include outright cybertheft and forcing USA companies to hand over technology in exchange for access to the Chinese market.

As its dispute with Washington deepened, Beijing has been calling on other countries to support global free trade and has talked up efforts to ease investment rules.

City traders will be trudging wearily to their desks this morning after last night's gripping World Cup drama, and worrying about the impact of a US-China trade war.

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