China accused the United States of bullying and warned that it would hit back after the Trump administration raised the stakes in their trade dispute, threatening 10% tariffs on $200 billion of Chinese goods.
On Wednesday, China's commerce ministry said that it was "shocked" and would complain to the World Trade Organisation, but it did not immediately say how it would retaliate. In a statement, it called the US actions "completely unacceptable".
The foreign ministry described Washington's threats as "typical bullying" and said that China needed to counter-attack to protect its interests.
"This is a fight between unilateralism and multilateralism, protectionism and free trade, might and rules," foreign ministry spokeswoman Hua Chunying told a regular briefing on Wednesday.
Trade Threats
Beijing has said that it will hit back against Washington's escalating tariff measures, including through 'qualitative measures' – a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals, and even consumer boycotts.
The Wall Street Journal, citing unnamed Chinese officials, said that Beijing was considering steps including holding up licences for US companies, delaying approvals of mergers involving US firms, and stepping up border inspections of American goods.
China could also limit visits to the United States by Chinese tourists – a business that state media said is worth $115 billion – or shed some of its US Treasury holdings, Iris Pang, Greater China economist at ING in Hong Kong, wrote in a note.
The $200 billion far exceeds the total value of the goods that China imports from the United States, which means that Beijing may need to think of creative ways to respond to such US measures.
List Of Goods
On Tuesday, US officials issued a list of thousands of Chinese imports that the Trump administration wants to hit with the new tariffs, including hundreds of food products, as well as tobacco, chemicals, coal, steel and aluminium, prompting criticism from some US industry groups.
It also includes consumer goods ranging from car tyres, furniture, wood products, handbags and suitcases, to dog and cat food, baseball gloves, carpets, doors, bicycles, skis, golf bags, toilet paper and beauty products.
"For over a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition," US trade representative Robert Lighthizer said in announcing the proposed tariffs.
"Rather than address our legitimate concerns, China has begun to retaliate against US products. There is no justification for such action," Lighthizer said.
Last week, Washington imposed 25% tariffs on $34 billion of Chinese imports, and Beijing responded immediately, with matching tariffs on the same amount of US exports to China. Each side is planning tariffs on a further $16 billion in goods, bringing the totals to $50 billion.
Markets Rattled
Investors fear that an escalating Sino-US trade war could hit global growth and damage sentiment.
On Wednesday, the MSCI's broadest index of Asia-Pacific shares outside Japan was down by about 1%, while the main indexes in Hong Kong and Shanghai recovered somewhat, after falling more than 2%.
S&P 500 and Dow futures dropped by around 1%, pointing to a weak opening on Wall Street later on Wednesday.
The onshore yuan tracked its offshore counterpart lower, with traders closely watching the key 6.7-per-dollar level, as pressure mounted on the currency.
US President Donald Trump has said that he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – roughly the total amount of US imports from China last year.
The new list, published on Tuesday, targets many more consumer goods than those covered under the tariffs imposed last week, raising the direct threat to consumers and retail firms, and increasing the stakes for lawmakers in Trump's Republican party, which is facing elections in November.
The list is subject to a two-month public comment period before taking effect.
'Tariffs are Taxes'
Some US business groups and lawmakers from Trump's own Republican Party were critical of the escalating tariffs.
Senate Finance Committee Chairman Orrin Hatch said that the announcement "appears reckless and is not a targeted approach".
The US Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but it does not back Trump's aggressive tariff policies.
"Tariffs are taxes, plain and simple. Imposing taxes on another $200 billion worth of products will raise the costs of everyday goods for American families, farmers, ranchers, workers, and job creators. It will also result in retaliatory tariffs, further hurting American workers," a Chamber spokeswoman said.
Louis Kuijs, the Hong Kong-based head of Asian economics at Oxford Economics, said that while he expects China to strongly condemn the US moves, its policy response is likely to be limited for now.
"In part because they have only limited ammunition, and in part because it's still early in the process on the US side," Kuijs said.
Getting 'Tough' On China
Trump has been following through on pledges that he made during his presidential campaign to get tough on China, which he accuses of unfair trade practices, including theft of intellectual property and forced technology transfer, which have led to a $375 billion US trade deficit with the country.
China's exports have mushroomed since it joined the World Trade Organisation in 2001, making it the world's second-largest economy and prompting widening criticism in recent years from trading partners that it has unfairly used global trade rules to its advantage.
As its dispute with Washington deepened, Beijing has been calling on other countries to support global free trade and has talked up efforts to ease investment rules. During a visit to Germany this week by Chinese Premier Li Keqiang, the countries signed business deals worth more than $23 billion.
"China stands in line with the international community, on the correct side of history, to together protect the rules of the multilateral trade order," foreign ministry spokeswoman Hua said on Wednesday.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
