Stocks, metals hit by new U.S.-China trade war salvo

Evarado Alatorre
Julio 11, 2018

The yen rose across the board on Wednesday and Asian stocks were poised to come under pressure after the United States said it would impose tariffs on an extra 200 billion worth of Chinese imports, escalating the trade war. It's unclear what that action could include.

- Global stocks tumbled Wednesday after Beijing hit back at USA plans for tariffs on $200 billion more Chinese exports, with tensions rising over the trade war between the world's two largest economies.

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.

The US said that was in response to Beijing's failure to change its policies and to retaliate for last week's US tariff hike by increasing its own duties on American goods.

The latest move suggests that Trump - who in March declared that "trade wars are good and easy to win" - may be compromising on his pledge to spare consumers from the pain.

"The Chinese side is shocked by the actions of the USA", it said in a statement, according to a translation by Google.

The US is planning to implement 25 per cent tariffs on a further $US16 billion worth of Chinese imports within the next fortnight.

U.S. Trade Representative Robert Lighthizer said the United States would impose tariffs of 10 percent on the additional Chinese imports.

China's commerce ministry said on Wednesday it was "shocked" and would complain to the World Trade Organisation, but did not immediately say how it would retaliate.

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The Office of the US Trade Representative is seeking submissions on the latest proposed tariffs and will conduct hearings in late August, making September the earliest possible implementation date for the new import taxes.

Chinese tariffs have already taken a toll on US exports such as soybeans, which raises questions about the possible political repercussions President Trump could face from farmers who supported him in the 2016 election.

In Beijing, Li Chenggang, assistant minister at China's Commerce Ministry, said that the latest U.S. proposals would hurt both countries and pointed to declines in Chinese export growth and overseas investment to the United States in the first half of this year. "It seems that the USA is escalating the scale of this trade friction", said Mr. Li, adding: "The negative impact of the trade friction has already appeared".

Senate Finance Committee Chairman Orrin Hatch, R-Utah, responded to Lighthizer's announcement with dismay.

As a leading grain trader in these regions, COFCO can help to meet domestic demand, Yu said.

Unfortunately for markets, no end is in sight, with further retaliatory levies nearly certain to be enacted by China in the coming days or weeks.

"The behaviour of the USA is hurting China, hurting the world, and hurting itself", a spokesperson for China's commerce ministry said in a statement.

European stock markets are expected to follow Asia's lead, as economics warn that a trade war would cause serious economic harm.

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