Published: Wed, July 11, 2018
Money | By Ralph Mccoy

United States tariffs take effect, China retaliates

United States tariffs take effect, China retaliates

After months of menacing rhetoric from the White House and responses of stoic assertiveness from Beijing, a 25% tariff levied on $34 billion worth of Chinese imported goods went into effect.

The Chinese government on Monday convened a meeting of a newly formed financial stability and development committee, headed by Vice-Premier Liu He, who led the trade talks with the US.

The official China Daily said the United States was intentionally trying to prevent China from developing to keep it from challenging the former's role in the global economic order.

But the European Union, the world's largest trading bloc, has rejected the idea of allying with Beijing against Washington, five European Union officials and diplomats told Reuters, ahead of the summit.

Instead, the summit is expected to produce a modest communique, which affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO, EU officials said. Because products that are made in China - from Apple products to Nike ones - are going to get expensive, and be more expensive on the shelves of Walmart for everyday American consumers.

In the latest sign that the risk of penalties is hitting trade, a vessel carrying US coal and heading for China switched its destination to Singapore.

As the two largest economies in the world, the USA and China are entangled.

The People's Bank of China Governor Yi Gang said in a statement on Tuesday that the central bank was closely watching fluctuations in the foreign exchange market and would seek to keep the yuan at a stable and reasonable level. "They firmly believe that free trade is a powerful engine for global economic growth".

A Chinese foreign ministry spokesman, Hu Chunhua, said retaliatory measures "took effect immediately". Wansleben added that China also needed to change its positions in many areas, "but there's definitely more room for improvement".

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Washington has said it would implement tariffs on $34 billion of Chinese imports on July 6, and Beijing has vowed to retaliate in kind on the same day.

According to CNN, a spokesperson for the Chinese Commerce Ministry warned that the USA tariffs would backfire, saying, "The United States will be opening fire on the whole world and also opening fire on itself". We are in one of the longest, if not the longest, economic expansions the United States has ever seen.

Midnight Eastern Time on Friday marked the moment the administration's tariffs on Chinese imports went into effect. Because frankly, Trump is right to criticize China. He said the policies are "a bit Far West, of an eye for an eye, a tooth for a tooth".

President Xi, the president of China, is taking a much longer view than Trump because China's presidency doesn't have term limits.

Trump has railed against Beijing for intellectual property theft and barriers to entry for United States businesses and a $375 billion USA trade deficit with China.

The company, known as AMSC and based in MA, was reeling after a Chinese partner stole its technology - the electronic brains that run wind turbines.

China has promised to open up. Before the establishment of the federal income tax in 1913, tariffs were a big money raiser for the US government. China's plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.

"There is no way to meaningfully influence Chinese behavior on intellectual property without coordination among like-minded advanced nations, and presently there is nearly none", said Daniel Rosen of the economic research firm Rhodium Group.

Chinese state media on Wednesday kept up a steady drum beat of criticism of the United States.

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