China vows retaliation for latest USA tariff threat

Beijing described the latest US move as “totally unacceptable” bullying and urged other countries to join China to protect free trade and multilateralism. — Reuters pic

China vows retaliation for latest USA tariff threat

Robert Holleyman, the US official in charge of trade with Asia during former president Barack Obama's second term, described the tariffs as "tax hikes on USA imports". It includes fruit and vegetables, handbags, refrigerators, rain jackets and baseball gloves.

Mr. Trump hit US$34-billion worth of Chinese imports with 25-per-cent tariffs starting last week, with another US$16-billion worth to be added shortly. "As an industry that touches 96 percent of all manufactured goods and which has much to gain from a productive, respectful trading relationship with China, ACC and our members remain hopeful that the US and China can resolve their differences and prevent further harm to USA manufacturers, farmers, and consumers".

The trade confrontation between Washington and Beijing has been escalating for months, despite Trump's repeated statements that he has a good relationship with China's President Xi Jinping.

"We will take firm and forceful measures", Hua Chunying, a Chinese Foreign Ministry spokesperson, said of the latest round of tariffs but gave no other details of what exactly Beijing plans to do in response.

China, however, has explicitly excluded LNG from its list of US energy goods that may be subject to tariffs, as it seeks to fight air pollution by a massive switch from coal-fired to gas-fired residential heating.

'It is totally unacceptable for American side to publish a tariff list in a way that is accelerating and escalating, ' it said.

On Tuesday, the president made good on his threat with the announcement of the new tariffs.

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Several traders said they saw some dollar selling by large state banks in the spot market, which went some way to supporting the yuan, though they did not know whether US dollar liquidity offered by the banks was on behalf of the central bank or corporate clients.

The US Dollar (via the DXY Index) is having its best day in two weeks as risk appetite continues to fade amid rising trade concerns among China, the European Union, and the United States. "There is no justification for such action". Wednesday's strong flows into the dollar/yen trade continued a trend that began after the United States last week reported decent employment data and a pickup in wages.

Washington chose to impose the extra tariffs after efforts to negotiate a solution to the dispute failed to reach an agreement, senior administration officials said on Tuesday.

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

China's stocks slumped following news of the new tariffs after three days of gains, and the yuan weakened.

"None of this has produced a dramatic change in other countries and has yielded further retaliation", Mr. Holleyman wrote in an e-mail.

"I don't want it to be detrimental to other people's interest either but certainly our interests are important", Senate Finance chairman Orrin Hatch, R-Utah, told reporters Wednesday morning.

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