The White House on Friday announced it is slapping tariffs on $50 billion of Chinese goods in response to alleged intellectual property theft, another escalation in President Donald Trump's trade-related acts against allies and rivals alike.
China's Foreign Minister Wang Yi has urged the United States to make a "wise decision" on trade as a deadline for the administration of President Donald Trump to release a list of tariffs targeting $50 billion in Chinese goods approaches. "We are going to protect those secrets, those are crown jewels for this country".
USA and European stocks fell and bonds gained on the news.
What happens next will determine how big of a deal Trump's China trade war is for the economy and stock market. The Dow Jones industrial average was down more than 220 points in mid-afternoon trading.
A fall in other metals, from aluminum to zinc, spurred declines for Teck Resources Ltd., Freeport-McMoRan Inc. and other miners. China previously announced plans to impose 25 percent duties on products including soybeans, wheat, corn, sorghum, cotton and beef in response to proposed tariffs from the U.S. In April, the Asian nation started levying additional taxes on American fruit, nuts, pork and wine.
The list of products issued by USTR covers 1,102 separate United States tariff lines valued at approximately $50 billion in 2018 trade values.
The president is due to announce the tariffs after the original batch - on about 1,300 Chinese products - was put on hold for trade talks. But it won't impose those tariffs until it gathers public comments.
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"As of now, we have two choices - there can be cooperation with the USA and mutual benefit, or confrontation and mutual loss", said Wang Yi, China's State Councilor.
Mexico has already retaliated with its own tariffs on USA goods.
"In this day and age, launching a trade war is not in the interest of the world", China's Commerce Ministry said. The US imported $505 billion of goods from China previous year and exported about $130 billion, leaving a 2017 deficit of $376 billion, according to government figures.
Trump's tariffs may also influence his efforts to bring peace to the Korean peninsula following his summit with leader Kim Jong Un this week in Singapore. Alternatively, tariffs could cause the USA dollar to rise, which usually makes it more hard for American companies to sell their products overseas, another potential hit to jobs and the economy. Trump claims China's theft of American intellectual property and technology made the tariffs a necessary part of conducting business.
"That is why I will continue to call for a meaningful strategy to address our deep trade deficit with China that has led to outsourcing of well-paying American jobs", she said. International Monetary Fund chief Christine Lagarde yesterday warned that the Trump administration's trade policies were likely to hurt the U.S. economy and undermine the world's trade system.
"We must take strong defensive actions to protect America's leadership in technology and innovation against the unprecedented threat posed by China", US Trade Representative Robert Lighthizer said in a statement.
"Imposing tariffs places the cost of China's unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers and ranchers". Much of the impact would fall on Trump's rural supporters.
But Trump and (most of) his top advisers say this is about winning the big economic war of the 21st century. We lost $500 billion in trade deficits a year ago. While the Trump administration has insisted that the enforcement action against Chinese communications equipment supplier ZTE was separate from the trade negotiation, it's not clear that Chinese President Xi Jinping agreed.