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US stocks open lower on escalating US-China trade dispute

05 April 2018

Earlier, China, the second largest trade partner of the us, had announced levies on 128 American products after Washington had announced import duties on Chinese steel and aluminum last month.

The United States today announced a proposed list of products imported from China that could be subject to additional tariffs of 25 per cent amounting to Dollars 50 billion. It was unclear whether the latest tariff hike was a direct response to that. He added that the company also has a factory in Vietnam that can replace some of its China production capacity if needed.

The Chinese foreign ministry's spokesperson Lu Kang on Wednesday said, "I must stress again that the U.S. side released the proposed tariff list in disregard of China's stern representations and on the basis of no facts".

"We hope the U.S. will actively respond to China's efforts to expand imports, Wang said, inviting American businesses to attend the first China International Import Expo in November and show their products and services to Chinese consumers". "The tariffs on US imports including soybeans is China's response that matches the scale of proposed USA tariffs".

China plans to immediately bring relevant U.S. practice to the dispute settlement body of the WTO, and is ready to take countermeasures on USA products with equal force, the state-run Xinhua news agency reported.

"Even though the numbers between China and the USA are comparable, it seems clear that China is trying to twist the knife", he said, "This is a warning that 'we are willing to fight harder and inflict more pain that you are'".

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"A key time has come for the United States and China to form a new consensus that includes intellectual property and the opening up of markets", said Song Guoyou, the deputy chief of the Center for American Studies at Fudan University.

"The list of tariffs that the USTR has proposed today would hurt companies in the U.S. by raising the prices and reducing consumption of the capital equipment they rely on to produce their goods and services", Information Technology and Innovation Foundation (ITIF) President Robert D Atkinson said. "However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those end", Brilliant said.

Tit-for-tat tariff threats from the US and China ignited fears that a trade war was beginning between the world's two largest economies, sending USA stocks tumbling Wednesday morning. Companies complain that might block access to those industries.

The Information Technology & Innovation Foundation (ITIF), a USA technology think tank whose board includes representatives from top companies such as Apple Inc, Amazon Inc, Cisco Systems, Google, and Intel Corp, said in a submission to the US government during the tariff investigation that 10 percent duties levied on Chinese ICT imports would slow the growth of USA output by $163 billion over the next 10 years.

Even some technology groups contending directly with Chinese competition expressed misgivings.

Investors may have also been comforted when Larry Kudlow, head of President Trump's National Economic Council, said the administration was not angling for a trade war.

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Ever more regrettable, the move will give the world a stronger impression that the USA government abuses global rules whenever it wants. China has pledged to halt such forced technology transfers.

In targeting sectors that Beijing is openly trying to promote, the USA is signaling that its strategic aim in the current conflict is preventing China from gaining the global technological leadership that it wants. And many have argued that Washington needed to respond aggressively.

"I think the anxiety the market is reflecting is that it could escalate into a generalized (trade) war", he told the business news channel. The Chinese embassy in the United States informed about it.

'We can not let this continue!' It was meant for a world in which much of global commerce wasn't covered by trade agreements.

"The administration is rightly focused on restoring equity and fairness in our trade relationship with China". But the China tariff gamble, which continues to shave value off global equities markets, is a whole different ball game from other recent trade actions. Beijing could counterpunch by targeting American businesses that depend on the Chinese market: Aircraft manufacturer Boeing, for instance, or American soybean farmers, who send almost 60% of their exports to China. "History is not kind to those who do it. History says all sides lose in trade wars". "They have a lot more to lose in any escalation in this matter".

The Dow rebounded from a massive decline to close 231 points higher in another rocky trading day as Wall Street bet that tariff threats and tough talk on trade from China and the Trump administration was likely a negotiating tactic and that the sides would eventually reach a deal to avoid a trade war.

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"The next couple of weeks will be very interesting", says Kristin Duncanson, a soybean, corn and hog farmer in Mapleton, Minnesota.

US stocks open lower on escalating US-China trade dispute