World News

U.S. trade war won’t work, says China

U.S. trade war won’t work, says China

"First, I suggest the USA take the right attitude and not to try to blackmail China as it doesn't work", spokesman Geng Shuang said in response to a question.

Washington already applied last July 6 tariffs of 25 percent on Chinese products valued in 34 billion dollars per year, under the argument of facing alleged disloyal practices of the Asian country related to the acquisition of intellectual and technological US property.

China says "blackmail" won't work and it will hit back if the United States takes further steps hindering trade, as the Trump administration considers slapping a 25 per cent tariff on $US200 billion ($A269 billion) worth of Chinese goods.

Wednesday's tariff announcement is all the more significant because it follows an agreement between President Trump and European Commission chief Jean-Claude Juncker to negotiate a resolution of trade differences between the U.S. and EU. However, this unwritten agreement includes the expectation of the US President that the European Union would fund 9 to 11 liquefied natural gas (LNG) ports to absorb "vastly" more shipments from the United States. Those tariffs have already started to affect some businesses, though only a small fraction of the US economy is experiencing consequences.

The latest action against China also comes closely behind the August interest rate decision from the Federal Reserve, which saw the USA central bank leave its monetary policy unchanged but reiterate an otherwise bullish outlook for the U.S. economy.

China on Friday announced a $60 billion list of USA goods including coffee, honey and industrial chemicals for retaliation if Washington goes ahead with its latest tariff threat.

Worsening trade tension between the two countries would not affect China's stance on the denuclearization of the Korean peninsula, Wang said.

Wang said Beijing recognizes that the USA side was trying to put pressure on China. The goods in the amount of $200 bln represent nearly the half of USA imports from China and about 10% of total US imports per year.

Erin Ennis, senior vice president of the U.S. China Business Council, said a 10 percent tariff on these products is already problematic, but more than doubling that to 25 percent would be much worse.

"If we're going to use tariffs, this gives us more flexibility and it's a more meaningful threat", he said, adding that Trump's pressure strategy will not work if he does not resolve trade disputes with USA allies such as the European Union, Mexico and Canada.

The list included products as varied as snow blowers and 3-D printers, suggesting Chinese authorities were struggling to find enough imports their own economy can do without.

"We would advise the United States to correct its attitude and not try to engage in blackmail".

Investors fear an escalating trade war between Washington and Beijing could hit global growth, and prominent USA business groups have condemned Trump's aggressive tariffs.

In the coming weeks, the USTR will analyze the president's proposal and will open a public consultation period in late August so that United States companies can offer their opinions on the measure.

And Bergsten warned that the U.S. economy is likely to slow and a trade war only makes that expected decline worse. "We deal with diplomatic matters on the basis of principle, not by engaging in trade".

China appears to have stripped back its imports of US crude oil to near zero for September, having taken about 333,000 barrels per day in the first six months of the year, according to vessel-tracking data.

"China trade tariffs weighed on both output and sentiment", said Aakanksha Bhat, Asia economist at HSBC in Hong Kong.

The caveat, with other comments, suggested Powell believed the Fed might be moving too aggressively to tighten United States monetary policy.