‘Totally unacceptable’: Beijing vows retaliation if United States taxes $200bn of Chinese goods

Blanche Robertson
July 12, 2018

China slammed the US threat to expand tariff hikes to imports including apples, fish sticks and French doors as a "totally unacceptable" escalation of their trade battle on Wednesday and vowed to protect its "core interests".

The European Union Chamber of Commerce in China said this week its member companies are rearranging their trade shipments to ensure any bound for the United States don't pass through China.

The executive's comments come as concerns are growing that hefty import tariffs applied by Beijing on American goods, including soybeans, will inflate costs for farmers and potentially increase retail prices of foods, like pork, the nation's favourite meat.

U.S. officials released a list of thousands of Chinese imports the administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminium. This has raised concerns that China could retaliate with non-tariff trade measures.

China imported USA goods worth $130 billion past year and Friday's tariff hike hit $34 billion of that, with another $16 billion cited for a possible increase.

"The Chinese side is shocked by the actions of the U.S.", a statement on the ministry's website declared. Trump has demanded that China cut its trade deficit with the U.S.by $200 billion in two years.

"China is shocked at the USA action", the Commerce Ministry said in a statement on its website Wednesday.

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The US has announced its plans to impose taxes on a further $200 billion worth of Chinese imports, in retaliation for China's retaliation to America's first round of tariffs. "China has not changed its behaviour - behaviour that puts the future of the US economy at risk".

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent, while the main indexes in Hong Kong and Shanghai fell more than 2 per cent.

The chairman of the Senate Judiciary Committee appeared on CNN's "New Day" Wednesday morning and told Alysin Camerota that recent Chinese tariffs targeting US exports of soybeans and corn had a profound effect on his state.

Some U.S. business groups and lawmakers from Trump's own Republican Party were critical of the escalating tariffs. Hours later, China's Commerce Ministry said the US tariffs were "totally unacceptable" and would force the country retaliate, without saying how. China, for example, exports far more to the USA than the US exports to China, resulting in Beijing's trade surplus of $375.2 billion in 2017. There have been no confirmed high-level talks between to two sides since early an early June visit to Beijing by U.S. Commerce Secretary Wilbur Ross that achieved no breakthroughs.

"The markets still remain sensitive to the trade-related theme, which is something investors have to take into account for the long term", said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management in Tokyo.

Li Yong, a senior fellow at the China Association of International Trade in Beijing said one retaliatory tactic China could deploy would be a bigger push to attract foreign investment, just not from the U.S.

According to the US, China uses predatory practices in a push to challenge American technological dominance - and allegedly forces American companies to hand over technology in exchange for access to the US market.

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