Published: Mon, September 24, 2018
Worldwide | By Gretchen Simon

'President's folly': China reaches into U.S. heartland in trade war

'President's folly': China reaches into U.S. heartland in trade war

The response, which came just over an hour after the United States imposed new duties on US$200 billion in Chinese goods on Monday, underscores a deepening gulf between both governments in a dispute that observers say is less about a row over a bilateral goods deficit and increasingly about a U.S. desire to put the brakes on China's economic ascent.

Fitch Ratings has cut its growth estimates for China and the world for 2019.

"The trade war is now a reality", said Fitch economist Brian Coulton.

China has accused the United States of "trade bullyism" and using economic measures like tariffs to intimidate other countries, lambasting the administration of President Donald Trump even as a fresh round of tariffs from both sides kicked in on Monday (Sept 24).

This week the U.S. sanctioned a Chinese military procurement organisation, drawing a sharp protest from Beijing and a decision to postpone planned military talks. Meanwhile, $US110 billion of goods from the US will become subject to Chinese retaliatory tariffs around the same time. Beijing vowed to strike back, slapping duties of up to 10pc on an additional $60bn in American products.

United States companies who import the affected Chinese products will now have to pay an additional 10 percent levy.

"Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook", the agency said in a report Friday.

The four-page section in Sunday's Des Moines Register, which carried the label "paid for and prepared exclusively by China Daily, an official publication of the People's Republic of China", featured such articles as one outlining how the trade dispute is forcing Chinese importers to turn to South America instead of the USA for soybeans.

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Though Beijing has not revealed what such steps might be, business executives and analysts say it could withhold exports of certain products to the US or create more administrative red tape for American companies operating in China. "We remain open to continuing discussions with China, but China must meaningfully engage on the unfair trading practices".

"The US-China trade war has no clear end in sight".

The resulting tariffs have lead to the United States stock indexes falling today, as industrial and technology sectors shares face the brunt of the trade war. "This latest tranche is a tsunami", said Hun Quach, vice-president of worldwide trade for the Retail Industry Leaders Association.

For U.S. consumers, the new duties could translate into higher prices for Chinese products ranging from vacuum cleaners to technology gear such as home modems and routers, while U.S. goods targeted by Beijing include liquefied natural gas and certain types of aircraft.

Although a senior White House official said last week the U.S. would continue to engage China "for a positive way forward", neither side has signaled any willingness to compromise.

Edward Alden, senior fellow at the Council on Foreign Relations, said there was a chance the trade war could spiral out of control but that there is "a window for serious negotiation".

Trump earlier this month accused China of targeting rural voters who support his presidency by hitting agricultural goods.

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