Markets hit as China counters U.S. move

Markets hit as China counters U.S. move

Markets hit as China counters U.S. move

The ministry said Beijing would impose tariffs on American-made products in two stages unless a trade compensation agreement could be reached with the U.S.

On Thursday, the administration of President Donald Trump announced that it would place tariffs on about 1,300 Chinese products.

Analysts said that traders were also spooked because China is the biggest buyer of United States government bonds, which the U.S. needs to sell to keep its economic wheels greased.

Trump has gone further than most business leaders and Republicans in Congress thought he would on trade. "China should first take measures to deal a blow to the industries in USA states that helped Trump win the 2016 presidential election and those states whose political leaders are still backing him in this year's midterm election". Trump also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the USA views as strategic, said senior White House economic adviser Everett Eissenstat.

He adds, "It doesn't mean a war with China". "Just as China wishes to deepen its economic ties with the rest of the world in President Xi's 'New Era, ' Trump's China policy may result in a divided world, risking not only global economic recovery but also stability". A probe was launched previous year under Section 301 of the 1974 U.S. Trade Act. He predicted tough talks ahead.

"I don't think local governments in the United States and President Trump hope to see USA workers losing their jobs", Sun Yongcai, general manager at Chinese railway firm CRRC Corp., which has two production facilities in the US, said at the forum.

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"Compared to a world with no trade, median-income consumers in the U.S. gain an estimated 29 per cent of their purchasing power from trade (according to a 2015 study)", it said. Even smaller-scale trade actions like Obama's tariffs on tires or Bush's on steel yielded more job losses than gains, studies have found.

The US is in discussions with the countries "on satisfactory alternative means to address the threatened impairment to the national security by imports of steel articles", and tariffs on steel imports from the trade partners will be exempt for now, it said. In fact, it's more likely that they will create two new problems by hurting both consumers and businesses.

Trump is "deliberately" relating trade measures to foreign policy, such as granting exemptions from some of the new tariffs to countries with security partnerships with the US, which will likely encourage these nations to take sides and adopt a hard-line policy toward China, Raymond Yeung and Daniel Wilson, analysts at Australia and New Zealand Banking Group, said in a note.

US Commerce Secretary Wilbur Ross on Thursday suggested the new measures on intellectual property were a way of bringing Beijing to the table, telling CNBC they were "the prelude to a set of negotiations". "We feel that focusing on reciprocal treatment while maintaining strong communications between the governments will be the best path forward to get to our goal of a level playing field based on fairness".

Those rules are embodied and overseen by the World Trade Organization, which now sees its authority challenged and possibly diluted by the US government's move to create tariffs without prior consultations - posing a threat to a trade architecture meticulously built up over decades.

But Chinese foreign ministry spokeswoman Hua Chunying said they aimed to increase educational and cultural exchanges to help mutual understanding and boost friendship. Beijing has commitments with other countries, and only 40 million tons of China's 2030 imports aren't already under contract, which accounts only for $13.5 billion at current prices.

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