Published: Sat, August 04, 2018
Money | By Arnold Ball

War Threats Weigh on the Market

War Threats Weigh on the Market

The Trump administration says it's looking into whether to increase the proposed tariff on 200 billion US dollar worth of Chinese imports from 10 percent to 25 percent.

He is also betting that the US could wield more leverage because Beijing cannot match the tariffs proposed on $200 billion in Chinese goods.

One person familiar with the internal deliberations said the U.S.is trying to secure certain concessions and if China agrees, it is possible the USA would back off additional tariffs. China also depends on trade more than the U.S. "If the United States takes further escalatory steps, China will inevitably take countermeasures and we will resolutely protect our legitimate right", Chinese Foreign Ministry spokesman Geng Shuang said in a press conference Wednesday.

Conflicting signs over the state of U.S.

The Trump administration threatened to raise proposed tariffs on Chinese imports from 10 percent to 25 percent, escalating USA trade tensions with Beijing.

So far, the United States has imposed duties on $34 billion of imports from China as part of a first tranche of sanctions on $50 billion of goods.

"As regards the threat by the USA to upgrade the trade war, China is fully prepared and will introduce counter-measures to defend the country's dignity and the interests of the Chinese people, and defend free trade and the multilateral system", China's commerce ministry said on 2 August. Washington is expected to soon implement more tariffs on $16 billion in additional Chinese goods, which China has already announced it will match immediately.

Donald Trump is ramping up the pressure on China.

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The White House is considering increasing planned tariffs on $200 billion of Chinese goods from 10 to 25 percent, according to unnamed sources familiar with the issue, as quoted by Bloomberg.

China has been accused of continuing to engage in unfair trading practices, particularly in tech, and, according to one official, its government has missed "many opportunities" to address specific concerns presented by the U.S.

In retaliation, Beijing said it would also levy duties on an equal dollar amount worth of USA goods as well as increase regulation for American companies that are doing business in the country.

Trump's ongoing trade dispute with China has put him at odds with members of his own party and the USA business community, who have expressed outrage about the protectionist bent of his administration's trade policies, and warned of negative consequences for the U.S. economy.

Asked about communication between the two countries on the dispute, Geng said China had "always upheld using dialogue and consultations to handle trade frictions", but that dialogue must be based on mutual respect and equality. China upped the ante on Thursday in response to the Trump administration's latest move.

In a tweet last month, US President Donald Trump suggested that China could be undermining a North Korean denuclearization deal because of the ongoing trade war.

American companies, industry and consumer groups have pleaded with the administration to avoid tariffs, saying they could raise their costs and eventually lead to price hikes for consumers.

Lighthizer published a list of the $200 billion in products that would face the 10 percent tariff threshold several weeks ago.

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