China Warns US of 'Countermeasures' Against Possible New Tariffs

Darnell Taylor
June 20, 2018

"People living in Canada are coming to the United States and smuggling things back into Canada because the tariffs are so massive..." This situation is no longer sustainable.

"Those manufacturers need to allocate to both the USA and the European Union and everywhere else that has a tariff on China", said Shiao.

The S&P 500 posted seven new 52-week highs and five new lows; the Nasdaq Composite recorded 135 new highs and 48 new lows. "President Trump has a great relationship with President Xi" Jinping of China.

"Donald Trump is once again at the centre of market sentiment, as fears over an impending trade war are heightened yet again", noted Joshua Mahony, market analyst at IG trading group. "In the near-term, we would expect to see volatility in markets as they attempt to price in the net impact of tariffs". Overnight the Shanghai Composite Index slumped almost 5 per cent at one point to its lowest level since mid-2016, as more than 1,000 stocks slumped by their 10 per cent daily limit.

Europe's main equity benchmarks sank 1 to 1.5 per cent and Wall Street futures were pointing to similar declines, while government bonds and the Japanese yen rallied as investors sought protection.

The Dow Jones industrials are down 318 points, or 1.3 percent, to 24,668. However, Sydney rose 0.4 per cent and Singapore edged 0.1 per cent higher.

Shares of large USA companies with significant overseas business were hit especially hard. The Stoxx Europe 600 was down 0.71 per cent and France's CAC 40 had slipped more than 1.1 per cent.

Curtin University economics lecturer Yixiao Zhou said under every scenario she had examined, Australia was a substantial loser from a trade war between China and the US.

U.S. President Donald Trump said on Tuesday progress was being made in slow-moving talks to update the NAFTA trade accord between the United States, Canada and Mexico, but he held out the prospect of striking bilateral pacts if a three-way deal could not be reached.

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He also said the sixth in line to the throne appeared "open" to the idea of Brexit when they had a "loose" talk about it. The Prince of Wales, the Duchess of Cornwall, and Princesses Beatrice and Eugenie were also in attendance.

A trade spat between the top two economies of the world began in April with Trump imposing tariffs on steel and aluminium imports into the U.S. from China, which also retaliated by imposing additional tariffs worth about $3 billion on 128 United States products.

"The actions President Trump has taken are purely defensive in nature", he said, asserting that "China does have much more to lose" because it sells so much more to the USA than it buys.

Due to Beijing matching the total amount of goods hit with tariffs, Trump said on Monday US time that China was "threatening United States companies, workers, and farmers who have done nothing wrong".

On April 3, the White House released a list of 1,300 Chinese products worth $50 billion that could be hit with potential tariffs.

The first round of penalties announced by both nations is set to take effect July 6.

"If the US loses its senses and publishes a new list", the statement said, "China will be forced to take comprehensive measures that are both strong in quantity and gravity and will fight back". He added that China is a "predatory economic government" that is "long overdue in being tackled, " matters that include IP theft and Chinese steel and aluminum flooding the USA market.

The move followed tariffs applied last week on $50 billion in Chinese imports to the US.

U.S. business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs. "The idea that they will knowingly drive the economy into recession seems unlikely".

Mats Harborn, the chamber's president, echoed those concerns, telling journalists that "the regulatory environment is actually holding the economy back".

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