China: ‘We’re Ready to Retaliate Against US Tariffs’

Despite the threat from President Donald Trump of tariff hikes on up to $450 billion of Chinese goods, Beijing shows no sign it will scale back plans it sees as a path to prosperity and global influence.

But it remained to be seen whether the American president would carry out recent threats to respond to any Chinese retaliation with maximum pressure – raising U.S. duties on Chinese goods in increments of $200 billion until virtually all the goods America buys from its largest trading partner are subject to duties.

U.S. President Donald Trump gestures during a Make America Great Again rally in Great Falls, Montana, U.S., July 5, 2018. He warned that the USA tariffs will hurt a lot of foreign companies that export goods from China to the United States. On Thursday, a spokesperson for China’s ministry of commerce said the U.S. will be “opening fire on the whole world and also opening fire on itself”.

Beyond that, China pays $24 billion a year for foreign patent and copyright licenses, according to government data. USA tariffs on steel and aluminum imports have provoked retaliatory measures against billions of dollars of American exports.

“In the past 40 years, the development of China’s society and economy has encountered many difficulties and problems, but as long as we uphold the leadership of the Communist Party and reform and opening up, we can surmount all challenges”, Guo said in a statement.

While Trump touts announcements of jobs created in steel plants due to the tariffs, manufacturing industries warn many more jobs will be lost in companies producing autos, auto parts, appliances and other goods that depend on imported components.

Several southern states, many of which also backed Trump in the election, also risk being hit.

Xi’s government has expressed confidence China can hold out against USA pressure, but companies and investors are uneasy. Back in 2013, Chinese investigators started making life hard for American tech “guardian warriors” like Google, Intel Corp., Apple Inc. and Microsoft Corp. after a magazine with ties to the Communist Party sounded the alarm about their dominant role in Chinese networks and business.

Chinese stocks have taken a beating in recent weeks, entering a bear market, as concerns about the trade war have mingled with worries about China’s ability to control its debt and maintain growth.

The duties on Chinese goods started at 12:01 a.m. Friday in Washington, which is just after midday in China.

A USA industry source said: “There is a 99 per cent chance that tariffs go into force on Friday”.

Together, the two rounds – $34 billion and $16 billion – would comprise the $50 billion in tariffs that Trump announced in May, citing China’s alleged theft of intellectual property, forced technology transfer and other industrial policies that favor China’s domestic businesses and hurt US firms. “China deficit, this is a point that I think the administration misunderstands”, she said. The president said United States tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.

“We want more trade, more business, more investment to be done”. USA and Chinese companies will now find it costlier to trade with each other, meaning less demand and higher prices.

White House trade officials say the current strength of the U.S. economy means Washington can withstand more pain than its rivals if the battle escalates further. Trump’s tariffs are meant to pressure Beijing to reform its trade policies. But recent USA tax cuts and spending increases will probably buoy the dollar and the nation’s current-account deficit anyway, the International Monetary Fund said this week.

“Generally speaking we’re not going to get caught up in the tariffs the United States is applying to China because we have a different export profile”, said Jacobi, who is executive director of the NZ International Business Forum. These tactics include cyber-theft as well as requiring American companies to hand over technology in exchange for access to China’s market. “Even if you force domestic technology companies (to improve), it may take a while for them to adapt”.

“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators”, WTO Director General Roberto Azevedo said in a statement.