“US President Donald Trump has signed a presidential memorandum that could impose tariffs on up to $US60 billion ($77 billion) of imports from China, sending shivers through Wall Street and prompting a vow from Beijing to “fight to the end”.”
Under the terms of the memorandum, Mr Trump will target the Chinese imports only after a consultation period, a measure that will give industry lobbyists and legislators a chance to water down a proposed target list which runs to 1,300 products.
China’s Washington embassy said it did not want a trade war, but would not recoil from one and would “fight to the end … with all necessary measures”.
It said it was “strongly disappointed” and it “firmly opposes” Mr Trump’s tariff plans.
China will also have space to respond to Mr Trump’s actions, reducing the risk of immediate dramatic retaliation from Beijing, and Mr Trump struck an emollient tone as he started speaking, saying “I view them as a friend”.
He said the loss of American jobs due to unfair trade was one of the main reasons he had been elected in 2016.
The United States runs a $486 billion goods trade deficit with China.
Washington will also pursue alleged breaches of intellectual property law by China through the World Trade Organisation, a body that has repeatedly drawn the ire of the administration but which could provide a resolution that avoids a trade war.
Following Mr Trump’s announcement, Wall Street plunged.
US markets suffered their worst day since the February 8 sell-off, with the Dow Jones index tumbling by 724 points, or 2.9 per cent, to 23,960.
The S&P 500 and Nasdaq also fell heavily — down by 2.5 and 2.4 per cent respectively — while European stock markets also suffered massive losses.
Talk of a global trade war emerged earlier this month when Mr Trump announced hefty tariffs on steel and aluminium imports, aimed at hitting Chinese overproduction, but which could also affect key allies like members of the European Union.
US Trade Representative Robert Lightizer said China would likely hit back with measures on US agricultural exports, particularly soybeans, and said if that happened, Washington would impose “counter-measures,” although he said that “nobody wins from a trade war,” a stance that appeared to put him at odds with Mr Trump who had termed trade wars “good and easy to win”.
Global stocks had sold off on Thursday (local time) on the expectation of tough action from Mr Trump, with US markets down as much as 2 per cent, but recovered somewhat after the announcement.
Following Mr Trump’s announcement, the US Trade Representative’s office will present a list of products that could be targeted, primarily from the high-tech sector.
There will then be a 60-day consultation period before definitive action will be put into force.
White House officials told a briefing ahead of the trade announcement that the administration was eyeing tariffs on $64 billion in Chinese goods.
They said the figure was based on a calculation of the impact on the profits of US companies that had been forced to hand over their intellectual property as the price of doing business in China.
There was no explanation of the difference between the numbers provided by White House officials in the briefing and Mr Trump’s $77 billion.
“Many of these areas are those where China has sought to acquire advantage through the unfair acquisition and forced technology transfer from US companies … establishing its own competitive advantage in an unfair manner,” Everett Eissenstat, deputy director of the National Economic Council, told reporters.
In addition, Mr Trump will also direct the US Treasury to propose measures that could restrict Chinese investments in the United States, Mr Eissenstat said.
The tariffs and investment restrictions will be imposed under the US Trade Representative’s “Section 301” investigation into alleged misappropriation of US intellectual property by China.
Mr Eissenstat said the investigation clearly demonstrates unfair practices by China, which forces US investors to turn over key technologies to Chinese firms.
Avoiding a trade war
Since taking office, Trump has taken a hard line on trade, abandoning a 14-nation Pacific trade pact and threatening to pull out of the North American Free Trade Agreement with Canada and Mexico.
He has also attacked Germany, saying it hides behind tariffs to win an export advantage for its car industry.
The administration has been forced to walk back some of its steel and aluminium measures, granting exemptions to Canada and Mexico and entering talks with the European Union and others to discuss potential exemptions.
Article from www.abc.net.au