'Reckless': Trump escalates trade war with another $US200b in Chinese tariffs

Soybean prices have fallen dramatically in recent weeks.
Daniel Acker  Bloomberg

Soybean prices have fallen dramatically in recent weeks. Daniel Acker Bloomberg

"The Chinese side is shocked by the actions of the United States", it said in a statement, according to a translation by Google.

"The Chinese government as always will have no choice but to take the necessary countermeasures", said China's ministry of commerce in a statement, without elaborating further. The latest list and round of tariffs comes on the heels of two other rounds of tariffs imposing 25 percent duties on $34 billion and $16 billion worth of Chinese imports.

The list is subject to two months of finalization and input before possible implementation by President Donald Trump.

In an April Twitter post, Trump said this allowed China to "get tremendous perks and advantages, especially over the US".

"Tonight's announcement appears reckless and is not a targeted approach", Senate Finance Chairman Orrin Hatch, a Utah Republican, said in a statement.

China imported USA goods worth $130 billion previous year and Friday's tariff hike hit $34 billion of that, with another $16 billion cited for a possible increase.

"I am curious to see what China does to retaliate in the coming days".

"Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise", he said.

"Unfortunately the markets haven't come to grips with the current levels of trade policies and tariffs", said Art Hogan, chief market strategist at B. Riley FBR in NY.

The move has been swiftly and heavily criticised by China, which said it was "totally unacceptable" for America to keep escalating the trade dispute.

"This is an appropriate response under the authority of Section 301 to obtain the elimination of China's harmful industrial policies".

European stock markets are expected to follow Asia's lead, as economics warn that a trade war would cause serious economic harm. Unfortunately, China has not changed its behavior-behavior that puts the future of the USA economy at risk. Tighter monetary policy also would boost the value of the dollar and dent USA exports - another hit to growth.

Experts have said that the outlook of the trade war depends on how China responds to the tariffs on its imports.

China's compliance with WTO guidelines lies at the heart of the conflict, notably over Beijing's alleged state support for purportedly private companies.

There was a price to be paid by American companies as government policies legislated winners and losers.

FILE PHOTO: Workers ride on an motor rickshaw through an aluminium ingots depot in Wuxi, Jiangsu province in this September 26, 2012 file picture.

Home furnishing retailers are expected to be hit particularly hard because China supplies 65 percent of US furniture imports, according to analysts at Goldman Sachs.

A final decision on the products to be hit with the new tariffs is expected following a consultation period in August. "But China's reaction to the U.S. tariffs could pose a far greater threat to the index in time".

S&P 500 and Dow futures dropped around 1 per cent, pointing to a weak opening on Wall Street later on Wednesday. President Donald Trump had ordered him last month to draw up the list in the event China retaliated against a previous round of US tariffs.

Less than a week into the trade war with China, President Trump is already thinking about levying more tariffs against goods imported from that nation to the U.S.

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