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China vows to take 'all legal measures' to protect interests as US trade war looms US imposes sanctions on China, stoking fears of trade war
(about 1 hour later)
As the Trump administration slapped trade sanctions on China, including restrictions on investment and tariffs on $50bn worth of products, fears of a trade war heightened.As the Trump administration slapped trade sanctions on China, including restrictions on investment and tariffs on $50bn worth of products, fears of a trade war heightened.
A Chinese foreign ministry spokeswoman said her country would “take all legal measures to protect our interest” if the US took “actions that will harm both China and itself”. A foreign ministry spokeswoman said China would “take all legal measures to protect our interest” if the US took “actions that will harm both China and itself”.
The US announcement would mark the end of a seven-month investigation into tactics China has used to challenge US supremacy in technology, including dispatching hackers to steal commercial secrets and demanding US companies hand over trade secrets in exchange for access to the Chinese market. The US announcement marked the end of a seven-month investigation into tactics China has used to challenge US supremacy in technology, including hacking commercial secrets and demanding US companies hand over trade secrets in exchange for access to the Chinese market.
Speaking at the White House, Donald Trump said the imposition of tariffs was part of an effort for fairness, noting that China imposes a 25% tariff on US cars while the US only has a 2.5% duty on Chinese cars. “They charge us, we charge the same thing,” said Trump.
White House aide Peter Navarro told reporters on a conference call “administrations before us and this administration have tried to work with the Chinese but with the Chinese talk is not cheap, it’s very expensive. Finally the president decided we needed to move forward.”White House aide Peter Navarro told reporters on a conference call “administrations before us and this administration have tried to work with the Chinese but with the Chinese talk is not cheap, it’s very expensive. Finally the president decided we needed to move forward.”
The US was “strategically defending itself [from] … economic aggression”, he said.The US was “strategically defending itself [from] … economic aggression”, he said.
The Trump administration argues that years of negotiations have failed to produce results. Dozens of industry groups, however, sent a letter to Trump warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling US agriculture, goods, and services exports; and raising costs for businesses and consumers”. The Trump administration argues that years of negotiations have failed to produce results. Dozens of industry groups, however, sent a letter to the president warning that “the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the US economy, provoking retaliation; stifling US agriculture, goods, and services exports; and raising costs for businesses and consumers”.
“It could be a watershed moment,” said Stephen Ezell, vice-president of global innovation policy at the Information Technology & Innovation Foundation, a thinktank. “The Trump administration’s decision to go down this path is illustrative that previous strategies have not borne the hoped-for fruit.” US stock markets reacted negatively on Thursday, with the Dow dropping more than 300 points. Caterpillar, 3M and Boeing – all with significant exposure to China – were among the biggest fallers.
Business groups mostly agree something needs to be done – but worry China will retaliate and start a trade war between the world’s two biggest economies. At one point, the index was down 500 points. It recovered on news that the tariffs would be subject to a period of consultation. The administration will ask the Office of the United States Trade Representative to come up with a list of products in the next 15 days. There will then be a 30-day comment period.
“The sanctions are a very big deal,” said Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics. “The Chinese see them as a major threat and do not want a costly trade war.” Fears of a trade war between the two biggest economies in the world were also reflected in the bond market, with US 10-year treasury bonds posting their biggest one-day drop in yields since September. Bank and tech stocks also fell. Facebook was down almost 3% on top of an 8.5% fall over the first three days of the week.
Speaking to reporters on Thursday Hua Chunying, a foreign ministry spokeswoman, referred to imports of US soybeans, airplanes, cotton and cars, saying they could be viewed as examples of “unequal” trade. The US also “refuses to export what China wants”, Hua said, possibly referring to restrictions on technology and military sales. “The biggest thing is the unknown about what the Chinese are going to do in response,” said Ian Winer, a securities analyst at Wedbush. “The tariffs were not worse than what people were expecting, but based on the industries they are going to slap the tariffs on, you’re going to see some reciprocal action from Beijing. If that’s the case there are a lot of global companies that could potentially hurt.”
But, Winer added, concern over a US-China trade dispute will hinge on inflationary pressures on consumer prices. “That’s the bigger issue. If China does something, and all of a sudden stuff that people are buying in Walmart and other places costs more, that’s not what the economy needs right now.”
On Thursday Hua Chunying, a foreign ministry spokeswoman, said imports of US soya beans, airplanes, cotton and cars could be viewed as examples of “unequal” trade. The US also “refuses to export what China wants”, Hua said, possibly referring to restrictions on technology and military sales.
“We are firmly against unilateralism and protectionism,” Hua said. “China will not watch our legal interest being harmed. China will take all legal measures to protect our interest. We hope the US can understand the core of mutual benefits, do not take actions that will harm both China and itself.”“We are firmly against unilateralism and protectionism,” Hua said. “China will not watch our legal interest being harmed. China will take all legal measures to protect our interest. We hope the US can understand the core of mutual benefits, do not take actions that will harm both China and itself.”
Trump’s move against China comes just as the US prepares to impose tariffs of 25% on steel and 10% on aluminium, sanctions that are meant to hit China but would if imposed unilaterally probably fall hardest on allies such as South Korea and Brazil, which ship more to the US. Trump’s move comes as the US prepares to impose tariffs of 25% on steel and 10% on aluminium, sanctions that are meant to hit China. The US trade representative, Robert Lighthizer, said on Thursday that Canada, Mexico, Europe, Australia, Argentina, Brazil and South Korea would for now be exempt.
US trade representative Robert Lighthizer said on Thursday Canada, Mexico, Europe, Australia, Argentina, Brazil and South Korea would for now be exempt from steel and aluminium tariffs. Trump campaigned on promises to bring down America’s trade deficit – $566bn last year – by rewriting agreements and cracking down on what he called abusive practices. In January, he imposed tariffs on solar panels and washing machines. Then he unveiled the steel and aluminium tariffs, saying reliance on imported metals jeopardised US national security.
Trump campaigned on promises to bring down America’s trade deficit – $566bn last year – by rewriting agreements and cracking down on what he called abusive practices. But he was slow to act. In January, he imposed tariffs on solar panels and washing machines. Then he unveiled the steel and aluminium tariffs, saying reliance on imported metals jeopardised US national security.
To target China, Trump has dusted off a cold war weapon: section 301 of the US Trade Act of 1974, which lets the president unilaterally impose tariffs. It was meant for a world in which much commerce was not covered by trade agreements. With the arrival in 1995 of the World Trade Organization, it fell largely into disuse.To target China, Trump has dusted off a cold war weapon: section 301 of the US Trade Act of 1974, which lets the president unilaterally impose tariffs. It was meant for a world in which much commerce was not covered by trade agreements. With the arrival in 1995 of the World Trade Organization, it fell largely into disuse.
At first it looked like Trump and Chinese president Xi Jinping were going to get along. They enjoyed an amiable summit at Trump’s Mar-a-Lago resort in Florida. But longstanding complaints about Chinese economic practices continued. The Chinese premier, Li Keqiang, this week urged Washington to act “rationally” and promised to open China to more foreign products and investment.
Chinese premier Li Keqiang this week urged Washington to act “rationally” and promised to open China to more foreign products and investment. Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics, said: “China has been trying to cool things down for weeks. They have offered concessions. Nothing seems to cool the fire. I fear they will take a hard line now that their efforts have been rebuffed … China cannot appear subservient to the US.”
Lovely said: “China has been trying to cool things down for weeks. They have offered concessions. Nothing seems to cool the fire. I fear they will take a hard line now that their efforts have been rebuffed … China cannot appear subservient to the US.” Hua said China hoped “that two sides can sit and talk calmly. On the principle of equality and mutual respect, we seek ways to guarantee mutual benefits through constructive dialogues and discussion.”
Foreign ministry spokeswoman Hua said some reports had used the term “economic invasion”. But she said: “China will not just sit and watch its legal interest be harmed. China will take all necessary measures to uphold its interest.”
“We really don’t like this expression,” she said. “We cannot understand, or accept this expression. No matter in which way some people explain it, this expression can not be the one to describe China.”
Hua added that China hoped “that two sides can sit and talk calmly. On the principle of equality and mutual respect, we seek ways to guarantee mutual benefits through constructive dialogues and discussion”.But she said: “China will not just sit and watch its legal interest be harmed. China will take all necessary measures to uphold its interest.”
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