Stocks plunge, then power back, after China announces tariffs

US fruit was on display in a supermarket in Beijing on Monday. China imposed tariffs on a selection of US goods Monday in response to President Trump’s tariffs on steel and aluminum

US fruit was on display in a supermarket in Beijing on Monday. China imposed tariffs on a selection of US goods Monday in response to President Trump’s tariffs on steel and aluminum

Just 11 hours after the Trump administration proposed 25 per cent tariffs on about 1300 Chinese industrial, technology, transport and medical products, China responded with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals. That could spell additional pain for U.S. carmakers like Tesla Inc, which makes all of its vehicles in the United States and will rely on exports to China for 9 per cent of revenue this year, according to Robert W. Baird & Co analyst Ben Kallo.

For its part, China conspicuously left large aircraft off its sanctions list Wednesday, suggesting it is reserving the option to target Boeing if relations deteriorate further.

China's planned move is in retaliation to the Trump administration announcing Tuesday that it would impose tariffs on about 1,300 Chinese goods worth about $50 billion annually.

Chinese foreign ministry spokesman Geng Shuang said China could "afford" the impact of the USA measures, and attempts to "subdue China through pressure or intimidation wasn't successful in history and won't be today".

Canada's soybean producers say China's expanded list of tariffs to be applied on USA products will cause global disruptions and uncertainty.

U.S. President Donald Trump's new tariffs on Chinese-made cars brought into the United States will not cause much pain for GM, according to James Chao, Asia-Pacific head of consultancy IHS Markit. The economies of China and the USA are highly complementary, and "cooperation is the only right choice for the two countries", the MOC said.

China's commerce ministry said it would hit back with "equal scale and equal intensity", and outlined that 106 USA products in 14 categories would attract an extra 25 per cent tariff.

Many consumer electronics products such as cellphones made by Apple Inc and laptops made by Dell were excluded from the USA list, as were footwear and clothing, drawing a sigh of relief from retailers who had feared higher costs for American consumers.

The new tariffs mark a significant escalation of the brewing trade war between the world's two largest economies - with the $100 billion worth of goods cumulatively targeted representing about 17 percent of the $580 billion in two-way trade past year.

Trade and business exchanges between South Korea and China turned chilly a year ago after South Korea deployed the USA -made Terminal High Altitude Area Defence (THAAD) anti-missile system despite vehement objections from Beijing. "That is not viable", Chinese Vice Commerce Minister Wang Shouwen told media briefing here today when asked about Trump's demand.

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"What we're talking about on both sides is a fraction of 1 per cent of both economies", he said, adding that the larger concern is the protection of United States intellectual property. If anyone wants to fight we will be there with him.

Neither the United States nor the Chinese tariffs will take effect immediately.

Washington's list was filled with many obscure industrial items, but China's strikes at signature USA exports, including soybeans, frozen beef, cotton and other agricultural commodities produced in states from Iowa to Texas that voted for Trump in the 2016 presidential election.

China will lodge a complaint with the World Trade Organisation.

'Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion.

The US worries that China is involved in cyberespionage and unfair government subsidisation that is helping China advance in technology. This was in response to the US decision to impose 25% duty on steel and aluminium products sourced from a group of producers, including China.

'We can not let this continue!'

Regulators use access to China's vast market as leverage to press foreign auto makers and other companies to help create or improve industries and technology.

The US move "severely infringed on the legitimate rights and interests that China enjoys in accordance with the WTO rules, and threatened China's economic interests and security", the MOC said.

The Semiconductor Industry Association says US companies have about half of global semiconductor market share, constituting the United States' fourth ranked export behind aircraft, refined oil and automobiles.

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