China warns United States "opening fire" on world with tariff threats

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The trade war arrives with many companies already struggling to find workers and facing backlogs to receive supplies.

Gao also said USA business interests would suffer from the first set of tariffs, with about US$20 billion of the targeted goods, or 59 per cent, produced by foreign firms, including U.S. ones.

He added that the trade war could cancel out previous gains from tax-code rewrite that Trump signed into law a year ago.

If implemented, this would raise the total amount of tariffs proposed by the Trump administration from around $500 billion to almost $800 billion. The USTR launched the investigation in August 2017 and determined IP theft was a major economic problem for the US.

USA tariffs on steel and aluminum imports have provoked retaliatory measures against billions of dollars of American exports. If the US tariffs come in at midnight on Friday US time, that's midday Friday in Beijing.

In its statement, the Fed indicated it planned to continue to gradually raise rates as it seeks to return monetary policy to a more normal state - after years of extraordinary efforts to stimulate growth - but cautioned that it was watching the trade conflict carefully.

Apart from a 25 per cent tariff on US$34 billion worth of US products as a tit-for-tat response to the US move, Gao did not specify what "qualitative measures" China would take if US President Donald Trump followed through on threats to impose tariffs on another US$200 billion worth of Chinese products.

The Trump administration views such deficits as alarming and Chinese trade practices as brash mercantilism, even a national security threat.

But Trump was subsequently critical of the deal, and trade experts blasted its vague terms.

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In a fresh sign of industry´s unease, a business survey on Thursday again showed the USA services sector was already experiencing supply chain interruptions and rising costs in anticipation of heightened trade restrictions. A state media editorial this week called the United States' "dictatorial bent" a global threat, while officials said China will "absolutely not" take the first swing. China's retaliatory tariffs will become effective "immediately" after the USA acts, according to the customs authority.

Harvard Business School Professor Willy C. Shih favors tax incentives, and even setting up import processing zones in the U.S.to repatriate offshore suppliers for the likes of Intel, Apple and Microsoft.

"By threatening unilateral action without having any allies and not reducing domestic discord on trade, the Trump administration has invited China to stand tough", said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies. For instance, Trump announced that the USA would expand the use of the Committee on Foreign Investment in the United States, which could limit Chinese investment in U.S. companies.

A 12-hour time difference between the two countries initially raised concerns that Beijing would be seen as the first to wage the trade war but the Chinese government is determined that it should not be portrayed as the provocateur.

"The United States will be opening fire on the whole world and also opening fire on itself", Gao Feng, a spokesman for the Chinese Commerce Ministry, said Thursday.

Chinese consumers and businesses will bear the brunt as prices rise thanks to higher tariffs. The increased costs lead to fewer purchases and generally create a drag on economic growth.

"With these stories coming out (about vehicle tariffs), you have a sector which has been very oversold meeting some potential good news on the trade war front", said Bank of America Merrill Lynch European equity strategist James Barty.

Supply chains will also suffer a blow, said Cliff Tan, East Asian head of global markets research at Japan's MUFG Bank in Hong Kong.

JPMorgan economists David Hensley, Bruce Kasman, Olya Borichevska, agreed that the direct economic consequences from the tariffs would likely be muted at first. "Even a modest threat to the global supply chains and institutions that support worldwide trade and production could hurt sentiment deeply and broadly, transmitting the shock well beyond the parties directly involved".

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