- Trade-War: China Announces 25 Percent Tariff on U.S. Imports
The world’s second-largest economy on Wednesday announced it would impose additional 25 percent tariff on imports of 106 U.S. products.
The Ministry of Commerce said the new charges would apply to around $50 billion of U.S. imports and expect the implementation of the proposed measures to commence when the U.S. applied its proposed tariffs announced on Tuesday. However, China said there is still room for negotiation between the two world’s largest trading nations and insists normalizing the trade deficit that exists between the two countries requires effort from both nations as China is always willing to buy but the U.S. is not always willing to sell.
“China’s response was tougher than what the market was expecting — investors didn’t foresee the country levying additional tariffs on sensitive and important products such as soya beans and airplanes,” said Gao Qi, Singapore-based strategist at Scotiabank. “Investors believe a trade war will hurt both countries and their economies eventually.”
Trump administration has consistently accused China of infringement on intellectual property and ripping off the U.S with trade imbalance of $375 billion in their favor. The U.S. is now expected to target high-tech sector that will hurt Beijing’s economic transformation if the two nations fail to reach an agreement.
Experts believe the inclusion of Soya beans in the list will hurt some of the key Republican states that backed US president during the national election. Soya beans are the biggest US agricultural export to China last year at a value of US$12 billion, but with China importing most of its soybeans from the U.S., the decision is likely to hurt China’s household income overtime and eventually weigh on growth going forward.
“There simply aren’t enough soya beans in the world outside of the US to meet China’s needs,” said Mark Williams, chief Asia economist at Capital Economics.
The price of soya beans features tumbled following the report, dropping 3 percent.
While the U.S. dollar dipped slightly against the Euro single currency to $1.2291, however, the price remained below the 20-day moving average.