Economy

Trump's tariffs: What they are and how they will work

Trump's tariffs: What they are and how they will work”

The first round of tariffs for American and Chinese goods goes into effect on Friday, officially plunging the two countries into a trade war that could end up undermining the USA economy.

The tariffs hit a broad spectrum of Chinese goods - like passenger vehicles, radio transmitters, aircraft parts and computer hard drives - from industries the Trump administration says have benefited from unfair trade practices.

China's commerce ministry, in a statement shortly after the U.S. deadline passed at 0401 GMT on Friday, said that it was forced to retaliate, meaning $34 billion worth of imported USA goods including autos and agricultural products also faced 25 percent tariffs.

"After the United States introduced the new tariffs, China's reciprocal measures also immediately took effect", said the spokesman for the Chinese Foreign Ministry Lu Kang.

Foreign companies accounted for $20 billion, or 59 percent, of the $34 billion of exports from China that would be subject to new US tariffs, with USA firms accounting for a significant part of that 59 percent, Gao said.

The Chinese Ministry of Commerce called the tariffs "typical trade bullying" and said Trump "launched the largest trade war in economic history".

Despite the market's gains Friday, much damage has already been inflicted on stocks that would stand to lose in a protracted trade battle with China. "You tax soybean exports at 25-percent, and you have serious damage to US farmers".

The trade dispute between the US and China escalated Friday, but Wall Street focused on a solid jobs report instead.

In June, the British leader warned both Trump and European Union leaders of the dangers of entering a tit-for-tat trade war.

Many European companies would suffer because they both produce and sell goods in the USA and China, the world's biggest economies.

Chinese Prime Minister Li Keqiang says there could be no victor in a trade war with the United States, yet China has to introduce countermeasures against Washington, which on Friday hiked tariffs on Chinese imports.

Trump repeatedly has slammed what he describes as Beijing's underhanded economic treatment of the United States.

"It has frequently waged wars against other sovereign countries and made use of the dominant influence of the USA dollar in the global markets to fleece other countries".

The Trump administration is poised to impose taxes on $50 billion of Chinese imports in high-tech industries, such as robotics, aerospace, and industrial machinery, in an attempt to punish Beijing for intellectual property theft and to rebalance a trade deficit.

Beijing also accused Washington of breaching trade rules of the World Trade Organisation (WTO). Sinovel has agreed to pay AMSC a total of $52.5 million in restitution.

China is the world's fastest growing beef importer and holds tremendous potential for US beef.

"China will never fire the first shot", Gao said.

Trump's 25 percent tariffs on Chinese goods takes effect on Friday.

Widely-read tabloid the Global Times, published by the ruling Communist Party's People's Daily, said the increasingly likely trade war would bring chaos to the world.

Asian markets largely fell yesterday in anticipation of the trade tariffs, with the Shanghai Composite Index shedding 0.9 per cent and closing at a two-year low, and Hang Seng falling 0.2 per cent. But he commended Trump for directing the U.S. Department of Agriculture to give farmers "a safety net during this short-term uncertainty". "I will try my best to support domestic products". Beijing's retaliation will follow promptly.

The European Union says it will soon take action to prevent steel produced for the US market from flooding into Europe due to tariffs introduced by President Donald Trump.



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