United States tech firms may feel brunt of China's trade counter attack

Soybean prices have fallen dramatically in recent weeks.
Daniel Acker  Bloomberg

Soybean prices have fallen dramatically in recent weeks. Daniel Acker Bloomberg

As the trade war escalates, another $200 billion of United States bound China-made goods will see 10 per cent import tariffs slapped on them; these will be under review for the next two months.

One problem for Beijing is that it imports far less from the USA than it exports - much to the annoyance of Donald Trump - and that gives it less scope to retaliate - they may run out of American goods to penalise.

More than 6,000 items could be affected - including burglar alarms, auto tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products.

Washington accuses Beijing of stealing or pressuring companies to hand over technology and worries plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership. That would leave China only $80 billion for further retaliation.

This builds on 25 per cent tariffs on $US34 billion worth of Chinese imports into the US that took effect at midnight on Friday, and carries out US President Donald Trump's threat to respond to any Chinese retaliation to those taxes.

Although it was not a direct reaction to the new move from Trump's administration, the official English-language newspaper China Daily said in an editorial that Beijing had to stand up to Washington.

China slammed the latest United States tariff threat as a "totally unacceptable" escalation of their trade battle and vowed Wednesday to protect its "core interests".

The USTR will accept public comments and hold hearings August 20-23 before reaching a decision after August 31, according to a senior USA official who briefed reporters on condition of anonymity.

Senate Finance Committee Chairman Orrin Hatch, a senior member of Trump's Republican Party, said the announcement "appears reckless and is not a targeted approach".

The tariffs are a "reckless strategy that will boomerang back to harm US families and workers", French said.

"The administration's announcement of a potential 10 percent tariff on $200 billion of additional imports from China, including a significant amount of chemicals, is a stunning and unfortunate development for USA manufacturers and consumers", ACC said in a July 11 statement.

"Trump's escalation of trade hostilities makes it increasingly hard to envision an exit path from an all-out trade war".

While Korean-made autos are exempt from USA duties under the bilateral trade pact implemented in 2012, market watchers say new tariffs of 25 percent could deal a heavy blow to local manufacturers and parts makers.

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent. This will allow the two countries enough time to settle their high-stakes trade dispute through negotiations.

Tariffs are hurting American consumers instead of resolving trade issues with China, National Retail Federation president and CEO Matthew Shay says. "This is totally unacceptable", the statement said.

On top of this, these tariffs are eliminating numerous economic gains created by last year's tax reform.

Connelly called the U.S. and China strategy of "placing unwarranted tariffs" on seafood products "misguided", and warned that it will "only hurt workers and consumers in their own countries".

"China has no option but to fight fire with fire". China has repeatedly denied accusations by the Trump administration of unfair trade policies. "So, now he's fighting two wars and that's a bit complicated", Tal said.

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