The United States and China imposed new tariffs on each other this Monday (24.9.2018), in a trade dispute is becoming increasingly bitter and is expected to have an impact on global growth, with neither of the world's two largest economies showing any signs of being willing to budge.
Shortly after the new tariffs went into effect, China accused the United States of becoming a "trade bully""l" and said it was bullying other countries into submission through measures such as tariffs, the official Xinhua news agency said.
However, China also indicated that it was willing to restart the trade negotiations with the United States if the talks are “based on mutual respect and equality”, Xinhua news agency said, citing the white paper on the trade dispute released by China's State Council.
Two countries applied tariffs
US tariffs on Chinese products and tariffs applied as China's retaliatory measures on US$60.000 billion worth of goods took effect at noon in Asia, although the initial level of tariffs was not as high as initially feared. The two countries already imposed tariffs on goods worth US$50.000 billion earlier this year.
Chinese products affected by new US tariffs include vacuum cleaners to internet-connected devices, while among the US products taxed by China are liquefied natural gas and certain types of aircraft
Although a senior White House official said last week that the United States will continue to engage China on a “positive path forward,” neither side has signaled a willingness to reach a consensus solution.
The US source said on Friday that there was no set date for the next round of talks. The Wall Street Journal reported that China, which has accused Washington of being insincere in trade negotiations, has decided not to send Vice Premier Liu He to Washington this week.
Economists warn that a prolonged dispute will ultimately hamper growth, not just in the United States and China, but in the rest of the world's economies.
Other areas
Trade tensions have also cast a shadow over relations between the two powers in other areas.
China has summoned the US ambassador to Beijing and postponed joint military talks in protest against a US decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system.
Trade talks in Washington last month failed to produce any significant progress.
Rob Carnell, ING's chief Asia economist, said in a note to clients that, lacking incentives, Beijing would likely hold off on any further negotiations for now.
"It would be seen as a gesture of weakness both vis-a-vis the United States and at home," he said, adding that there was "enough stimulus on the way" to limit the damage of the latest tariffs on China's growth.
Port of Yangshan, in Shanghai. Photo: AP
"The trade war between the United States and China has no clear end in sight."
China may also be looking to the US midterm elections early next month for any hint of changes in Washington's policy stance, Carnell added.
"With the polls generally favouring the Democrats, (China) may perceive that the trade environment will be less hostile after November 6."
The US administration will impose 10% tariffs on $200.000 billion worth of Chinese goods, with tariffs rising to 25% by the end of 2018.
Beijing set new levies on $60.000 billion of U.S. goods at rates between 5% and 10% and warned it would respond to any U.S. tariff increases proportionally.
US President Donald Trump on Saturday reiterated the threat to impose additional tariffs on Chinese goods if Beijing retaliates, in line with his previous comments suggesting Washington could impose tariffs on virtually all imported Chinese goods if the administration does not get its way.
China imports far fewer products from the United States, making identical retaliation to all US tariffs impossible.
"Qualitative" measures
However, he has warned against "qualitative" retaliatory measures.
Although Beijing has not disclosed what those steps might be, business executives and analysts say China could withhold exports of certain products to the U.S. or create more administrative red tape for American companies..
Some analysts say there is also a risk that China will allow its currency to weaken again to cushion the blow to its exporting companies.
Source: Reuters
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