US and China trade war looms as new tariffs unveiled

Wide range of products ranging from flat screen televisions to industrial components hit

The prospect of a full-blown trade war intensified on Friday after the United States announced $50 billion worth of tariffs on China, prompting Beijing to warn it would retaliate.

The White House announced that it will impose 25 per cent tariffs on $34 billion of Chinese imports from July 6th. In addition the administration proposed a new set of tariffs on $16 billion of products, which will take effect later.

In a statement, Mr Trump – who has vacillated on the issue of trade tariffs on China – said the tariffs were “essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs.”

“My great friendship with President Xi of China and our country’s relationship with China are both very important to me,” said Trump. “Trade between our nations, however, has been very unfair, for a very long time.”

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The first tranche of tariffs which will go into effect on July 6th cover 1,102 categories of Chinese goods, including products used in the aerospace, industrial goods and IT sectors.

The White House also said it would unveil extra tariffs if China retaliated.

Chinese reaction

In a statement the Chinese commerce ministry said it would “immediately introduce tariff measures of the same scale and strength,” adding that all the results of previous negotiations between the two parties would be invalid.

Washington and Beijing have been engaged in high-level trade talks, with Treasury Secretary Steve Mnuchin leading a trade delegation to Beijing in May.

But Friday’s announcement is the strongest indication yet that Mr Trump is willing to push through on the protectionist agenda promised during his presidential campaign, and follows a fractious G7 meeting dominated by trade tensions.

It is also potentially a political gamble as Mr Trump hopes for Chinese support for the North Korean deal he signed this week in a landmark summit with Kim Jong-un.

As US businesses, and the farming community, braced itself for details of China’s retaliatory measures, the head of the American Chamber of Commerce criticised the move.

“Imposing tariffs places the cost of China’s unfair trade practices squarely on the shoulders of American consumers, manufacturers, farmers and ranchers,” said chief executive Tom Donohoe. “This is not the right approach.”.

US political unease

This view was echoed by some Republicans, including Utah senator Orrin Hatch who warned that tariffs will “harm American and Chinese businesses and consumers, and will put economic growth in both countries at risk.”

But some Democrats welcomed the move. “Trump’s actions are on the money,” said Senate minority leader Chuck Schumer who has often sparred with the President.

“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.”

Critics of Mr Trump have argued that the President has erroneously targetted key US allies instead of China in recent months, for example tackling the issue of steel oversupply by China, by placing tariffs on steel and aluminimum imports from the European Union, Canada and Mexico.

Suzanne Lynch

Suzanne Lynch

Suzanne Lynch, a former Irish Times journalist, was Washington correspondent and, before that, Europe correspondent