Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

Security guards walk in front of containers at the Yangshan Deep Water Port in Shanghai

Security guards walk in front of containers at the Yangshan Deep Water Port in Shanghai

China on Saturday announced its decision to impose additional tariffs on American products worth $50 billion, in response to the United States' declaration of levying 25 per cent duties on Chinese goods, a day earlier. International Monetary Fund chief Christine Lagarde yesterday warned that the Trump administration's trade policies were likely to hurt the United States economy and undermine the world's trade system.

Beijing and Washington have held three rounds of high-level talks since early May that have yet to yield a compromise, with Mr Trump unmoved by a Chinese offer to buy an additional US$70 billion worth of U.S. farm and energy products and other goods, people familiar with the matter have said.

In a statement on Friday, the State Council's Customs Tariff Commission said the USA was violating the rules of the World Trade Organization, and contradicting previous negotiations between Washington and Beijing.

China "doesn't want a trade war" but has to "fight back strongly", the Commerce Ministry said in a statement.

Beijing also said "all economic and trade agreements reached by previous negotiations will be nullified at the same time".

Trump has pledged to enforce fair and reciprocal trading relations with China, with the US bilateral trade in goods deficit having reached $375 billion a year ago, and amid long-running complaints of what foreign companies see as forced technology transfers and market restrictions.

Boeing garnered about 12.8 per cent of its 2017 revenues from China and is frequently seen as among the more vulnerable USA multinationals to a full-on trade war.

Trump laid out a list of more than 800 strategically important imports from China that would be subject to a 25 percent tariff starting on July 6, including cars, the latest hardline stance on trade by a USA president who has already been wrangling with allies. The Chinese haven't issued a list but have stated it would be an identical 25% on $50 billion of American exports.

He said: "China is our real trade enemy, and their theft of intellectual property and their refusal to let our companies compete fairly threatens millions of future American jobs".

"Manufacturers certainly have concerns that tariffs will cause more problems than they solve, but we also recognize that the administration may intend to use them as a negotiating tactic to bring China to the table and achieve larger goals", Timmons said.

The new tariffs would take effect from July 6, according to the office of trade representative Robert Lighthizer.

A Chinese government website posted a list of seafood products that will face the tariffs, and it included live, fresh and frozen lobster.

Trump previously imposed tariffs on steel and aluminum imports from Canada, Europe, Japan, Mexico, a move that drew strong rebukes from USA allies.

Ford on Friday reported a dip in May sales in China but said it had recently implemented a price cut on imported Ford cars and Lincoln vehicles following a cut in tariffs.

"We deeply regret that the United States has disregarded the consensus formed. and provoked a trade war".

The US had earlier warned that it will impose even more tariffs should China retaliate.

Reacting to Trump's latest move, China has vowed to immediately retaliate.

Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve US complaints over Chinese industrial policy, market access and a $375 billion trade gap.

Those restrictions are aimed at stopping China from developing its own hi-tech industry with technologies acquired from the USA - one of Washington's long-standing complaints.

For example, President Trump complains that the European Union imposes a 10 percent tariff on us -made cars, while the usa imposes a 2.5 percent tariff on foreign-made cars. "If there was ever a time for the US seafood industry, restaurants and retailers to come together to work towards a common goal of market access and supporting good American jobs and healthy sustainable American seafood, it is right now".

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