China Trade War or Tit for Tat?

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President Trump has threatened to slap tariffs on as much as $150 billion in Chinese products, in an effort to cut the bilateral trade imbalance that the USA says favors China by $375 billion.

"We will take the initiative to expand imports", Chinese President Xi said, noting that the country's imports will take into account competitiveness and the needs of the Chinese people.

His comments follow a week of escalating tariff threats sparked by us frustration with China's trade and intellectual property policies.

The United States and China have announced proposed tariffs on imports from either nation in recent weeks, creating renewed concern that this tit-for-tat trade spat may escalate into a full-blown trade war between the world's largest economies.

That would be costly for China, but President Xi Jinping has already said he's willing to do whatever it takes to win this thing.

Xi's renewed pledges to open up the auto sector come after Trump on Monday criticised China on Twitter for maintaining 25 percent auto import tariffs compared to the United States' 2.5 percent duties, calling such a relationship with China not free trade but "stupid trade".

The United States is not expected to apply its tariffs at least until June, according US Trade Representative Robert Lighthizer, White House chief economic adviser Larry Kudlow and other senior officials.

"We hope developed countries will stop imposing restrictions on normal and reasonable trade of hi-tech products and relax export controls on such trade with China", he said.

Stocks markets fell after that and Trump's statement last Friday calling for another wave of tariffs sent the Dow Jones Industrial Average 572 points or 2.3% lower from the day before.

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"In this case, the U.S. and China are the top two economies of the world and also the largest two trading nations".

The US move last week to threaten China with tariffs on US$50 billion in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of US intellectual property and forced technology transfers from US companies.

Earlier in the day, Trump tweeted about the "STUPID TRADE" with China, saying that when a Chinese-made vehicle is sent to the usa, the tariff is only 2.5 percent, while American cars exported to China are slapped with a 25 percent tariff.

Speaking at the Chinese embassy in Washington, Mr Ruan said: "Washington underestimates China's resolve and determination". When ties between Beijing and Seoul chilled, Chinese tourism to South Korea plummeted and Chinese consumers shunned Made-in-South-Korea products.

China's global surpluses are now far below the US negotiating targets of a few years ago, China has spent about $1 trillion propping up its currency, and intellectual-property protections are far better enforced.

First, globalization and trade have caused significant disruption to the US economy, but this has had little to do with the trade agreements of the past generation. The Chinese response was quick, coming less than 24 hours after the USA announcement.

Media captionHow hogs and Harleys became weapons in a looming trade war.

Trump remained defiant and argued the pain of the dispute will pay off in the end, while China said that his administration would only "shoot itself in the foot" if it didn't back down from the "extremely wrong" threats.

He pointed out that with crude palm oil (CPO) being viewed as a major rival to soybean oil in the major edible oil markets such as in China and India, a 25% tariff on soybean imports could help boost CPO prices. He argued that the situation could be a "win-win" for China and the United States if Beijing opens up its economy.

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