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China tariffs threaten European capital goods supply chains

08 August 2018

Friday's threat targeting a smaller amount of us goods reflects the fact that Beijing is running out products for retaliation due to its lopsided trade balance with the United States.

Trump earlier proposed 10 percent tariffs on an additional $200 billion of Chinese imports.

China has either imposed or proposed tariffs on $110 billion in US goods, representing the vast majority of its annual imports of American products.

One of the biggest targets of the China tariffs has been farmers; Beijing is the biggest buyer of US soybeans, importing more than $12.4 billion worth of the oil seed in 2017, according to the Peterson Institute for International Economics.

"I sense that we're seeing a hardening of attitudes on both sides", said Jacob Parker, vice president of China relations at the U.S. China Business Council.

The commercial war between the world's first and second economy is stepping up and taking a new turn this Friday, as Beijing is reacting strongly through series of announcements.

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Trump has said he is determined to reduce the large USA trade deficit with China. "Other countries use Tariffs against, but when we use them, foolish people scream!"

The Chinese reaction is sure to ratchet up tensions with the Trump administration at the end of a week that saw stock markets rattled by the intensifying trade battle.

The Ministry of Finance said in a statement that the retaliatory measures were in response to the latest United States threat on July 11 to slap duties on Dollars 200 billion worth of Chinese products, and to raise those tariffs from 10 to 25 per cent.

"Cooperation is the only right choice for China and the United States", Chinese Foreign Minister Wang Yi said after meeting US Secretary of State Mike Pompeo in Singapore, according to China's official Xinhua news agency. There's recently been some communication at the highest levels, he told reporters outside the White House.

"Given China's huge market, its systemic advantage of being able to concentrate resources on big projects, its people's tenacity in enduring hardships and its steadiness in implementing reform and opening-up policies, the country can survive a trade war".

White House spokeswoman Lindsay Walters also said there had been "high-level discussions on multiple occasions in the past few months" and Washington remained open to further talks with China.

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Beijing fought back with matching tariffs on the same amount of USA exports to China.

"The magnitude, we don't know yet", Kassis said.

Similarly, South Korean officials reached an agreement in principal in March to set a quota on steel and aluminum imports as a way to avoid tariffs, but no information about that deal has ever been disclosed. The amount could be even larger if the United States resolves a logistics bottleneck.

Its response is to threaten retaliatory duties on 5,207 items originating in the United States, with tariffs ranging from 5% to 25%.

China's biggest U.S. imports by value in 2017 were aircraft and related equipment, soybeans and autos.

Trump has repeatedly used the threat of tariffs to try to force concessions from a range of USA trading partners around the globe, and this approach has had mixed success.

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One Mahoning Valley expert said the Chinese tariffs would have a negative impact on businesses in the region.

China tariffs threaten European capital goods supply chains