Published: Sun, July 15, 2018
Finance | By Gustavo Carr

Trump Fires Another Volley in US-China Trade War

Trump Fires Another Volley in US-China Trade War

Now consumers are in the cross-hairs. That prompted fears Beijing, running out of imports for retaliation due to its lopsided trade balance with the US, might try to disrupt operations of American automakers, retailers and others that see China as a key market.

"The retaliatory options available to China include boycotting American goods, sharply devaluing the yuan, and selling off U.S. Treasury holdings", wrote Xiao Minjie, senior economist at SMBC Nikko Securities in Tokyo.

The Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports.

Administration officials said a two-month process will allow the public to comment on the proposed tariffs before the list is finalized.

President Donald Trump vowed to hit back on a growing list of products after China retaliated in kind for the first round of 25 per cent tariffs on $34 billion worth of imports that Washington imposed last week.

Optical fiber preforms from the United States and Japan will face additional duties of 37.9 to 78.2 percent for five years, the Ministry of Commerce announced.

While cranking up the tariff war, the United States has also indicated its willingness to talk. But economists say Beijing is unlikely to do so.

"The markets still remain sensitive to the trade-related theme, which is something investors have to take into account for the long term", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

On Friday, the administration imposed 25 percent tariffs on $34 billion of Chinese imports.

The euro fell 0.25 per cent to 130.11 yen and the Australian dollar lost 0.7 per cent to 82.24 yen.

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The list of the $200 billion worth of goods targets electronics, metal components, textiles, auto parts, as well as food and personal sectors. Of all the frozen tilapia the United States imports, roughly 83 percent comes from China.

"We share the concerns expressed by the American side", he said. "The negative impact of the trade friction has already appeared". It left untouched USA -branded smartphones and laptop computers. "The average consumer hasn't yet internalized what the tariffs mean to them and haven't seen prices rise". No high-level talks are being held, and none have been scheduled.

"The markets had some time to digest the latest trade war developments and are poised to begin consolidating".

The U.S. economy is in what many would consider "goldilocks" mode-with unemployment at lows not seen in almost two decades and strong GDP growth.

Companies that sell computer chips, oil, basic materials and heavy machinery dropped after the Trump administration proposed a 10% tax on a wide list of imports.

Still, the indirect effects could be greater, he said.

You can follow global stock markets live at Markets Insider.

The Chinese government has earlier said the latest threat was "totally unacceptable". -Chinese trade war spreads.

The general manager of a medical device exporter that makes 15 percent to 20 percent of its sales to the United States said he plans to fly to the US this week to negotiate with customers who stopped ordering its syringes and other equipment. But other items, like hand tools, lamps or fans, could be affected. For example, Home Depot might spread the added tariff costs over several products so the Chinese-made product wouldn't necessarily absorb a big price increase.

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