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US-China trade: Beijing responds with tariffs of its own Wall Street falls on trade tit-for-tat
(about 1 hour later)
Trade tensions between China and the US have been ramped up after Beijing responded to US plans for putting new taxes on hundreds of Chinese imports.Trade tensions between China and the US have been ramped up after Beijing responded to US plans for putting new taxes on hundreds of Chinese imports.
China said it would place 25% trade tariffs on 106 US goods, including soybeans, cars and orange juice. China said it would place 25% trade tariffs on 106 US goods, including soybeans, aircraft and orange juice.
The tit-for-tat action comes hours after Washington detailed about 1,300 Chinese products it intended to hit with tariffs - also set at 25%.The tit-for-tat action comes hours after Washington detailed about 1,300 Chinese products it intended to hit with tariffs - also set at 25%.
But President Trump tweeted the US was not in a trade war with China. Wall Street opened sharply lower as investors reacted to the plans.
The Dow tumbled more than 400 points in morning trade or 1.75% as the dispute escalated.
The S&P 500 fell about 29 points or 1.1%, while the Nasdaq was down about 77 points or 1.1%.
Boeing and Caterpillar - among the firms that investors expect to be most affected by the plans for tariffs - were among the biggest losers on the Dow, down more than 3%.
Stock markets in Europe also fell, with investors taken aback by the speed of China's response.
Beijing said it "strongly condemns and firmly opposes" the proposed US tariffs, calling them "unilateralistic and protectionist", and vowing to retaliate.
But US President Donald Trump tweeted the US was not in a trade war with China.
This is the second wave of tariffs imposed by the US. Earlier this year, Mr Trump announced import taxes on aluminium and steel.This is the second wave of tariffs imposed by the US. Earlier this year, Mr Trump announced import taxes on aluminium and steel.
Chinese items targeted by the US in this latest round of tariffs include televisions and motorcycles. The White House said its new plans were a response to unfair Chinese intellectual property practices.
The White House said its proposals were a response to unfair Chinese intellectual property practices. The US plans involve a wide range of goods, while the Chinese tariffs are more narrowly targeted at politically important sectors, such as agriculture.
Stock markets in Europe fell, with investors taken aback by the speed of China's response. In New York, the Dow Jones is expected to open about 550 points lower. US economists said they expect the broader economic impact of the measures to be limited, especially since they set the stage for negotiations.
Earlier, Beijing said it "strongly condemns and firmly opposes" the proposed US tariffs, calling them "unilateralistic and protectionist", and vowing to retaliate. However, they warned that the risk of further escalation could weigh on businesses.
The products targeted by the Chinese tariffs were worth $50bn (£35.5bn) in 2017, according to the Chinese commerce ministry. "It's the tit-for-tat uncertainty that shakes business confidence," said Satyam Panday, senior economist at S&P Global Ratings. "Why should I invest when there's no certainty?"
US chemicals, some types of aircraft and corn products are among the goods facing the taxes, the finance ministry said. The US and China exchanged more than $700bn in goods and services last year, according to US figures.
The plans for tariffs involve products worth an estimated $50bn (£35.5bn) from each country in 2017.
US chemicals, some types of aircraft and corn products are among the goods facing the taxes, China's finance ministry said.
Extra tariffs will also be placed on whiskey, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products.Extra tariffs will also be placed on whiskey, cigars and tobacco, some types of beef, lubricants, and propane and other plastic products.
US orange juice, certain sorghum products, cotton and some types of wheat, as well as trucks, some SUVs and certain electric vehicles, will also be subject to the new duties, the ministry added.US orange juice, certain sorghum products, cotton and some types of wheat, as well as trucks, some SUVs and certain electric vehicles, will also be subject to the new duties, the ministry added.
Economists had previously warned the Trump administration's move to penalise China with the tariffs could prompt Beijing to retaliate and lead to higher prices for US consumers.Economists had previously warned the Trump administration's move to penalise China with the tariffs could prompt Beijing to retaliate and lead to higher prices for US consumers.
However, Mike Thompson, a president at S&P Investment Advisory Services, said Wednesday's stock market declines were not an indicator of wider havoc, but a sign of investors looking to profit from the reactions.
"I don't want to sound Pollyanna-ish, but I think the market sees this as the opportunity to trade," he said.
'No winner''No winner'
The planned US tariffs are the result of an investigation ordered by US President Donald Trump into China's intellectual property practices.The planned US tariffs are the result of an investigation ordered by US President Donald Trump into China's intellectual property practices.
Last month, he said the inquiry had found evidence of problems, such as practices that pressure US companies to share technology with Chinese firmsLast month, he said the inquiry had found evidence of problems, such as practices that pressure US companies to share technology with Chinese firms
The office of the US Trade Representative, which handles trade negotiations, said that its tariffs would apply to about $50bn of Chinese imports.The office of the US Trade Representative, which handles trade negotiations, said that its tariffs would apply to about $50bn of Chinese imports.
That was an amount which was "appropriate both in light of the estimated harm to the US economy and to obtain elimination of China's harmful acts, policies and practices", it said.That was an amount which was "appropriate both in light of the estimated harm to the US economy and to obtain elimination of China's harmful acts, policies and practices", it said.
The list includes parts of communication satellites, semiconductors, aviation equipment and brewery machinery, as well as more niche products such as bakery ovens and rocket launchers.The list includes parts of communication satellites, semiconductors, aviation equipment and brewery machinery, as well as more niche products such as bakery ovens and rocket launchers.
A final list will be determined after a public comment period and review, expected to last about two months.A final list will be determined after a public comment period and review, expected to last about two months.
Beijing has been adamant that it did not want a trade war, but that it would not not back down under US pressure.Beijing has been adamant that it did not want a trade war, but that it would not not back down under US pressure.
"Any attempt to bring China to its knees through threats and intimidation will never succeed," foreign ministry spokesman Geng Shuang said."Any attempt to bring China to its knees through threats and intimidation will never succeed," foreign ministry spokesman Geng Shuang said.
"There is no winner in a trade war, and an initiator will harm itself as well as others.""There is no winner in a trade war, and an initiator will harm itself as well as others."
Mr Geng said China had referred the US to the World Trade Organization.Mr Geng said China had referred the US to the World Trade Organization.
Hopes for a resolution
China's economy has become less dependent on selling goods abroad in recent years, which is likely to blunt the effect of the US tariffs, according to analysts for S&P Global Ratings.China's economy has become less dependent on selling goods abroad in recent years, which is likely to blunt the effect of the US tariffs, according to analysts for S&P Global Ratings.
The US was the destination for about 18.2% of all Chinese exports in 2016, according to the US trade department.The US was the destination for about 18.2% of all Chinese exports in 2016, according to the US trade department.
American business groups have urged the two sides to try to resolve the issues through talks, expressing concern that threatening tariffs could lead to a dispute that hurts the US economy.American business groups have urged the two sides to try to resolve the issues through talks, expressing concern that threatening tariffs could lead to a dispute that hurts the US economy.
"The administration is rightly focused on restoring equity and fairness in our trade relationship with China," said the US Chamber of Commerce.
"However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends."