US tariffs take effect, China warns of 'counterattack'

Chinese flag

And they say the current U.S. economic strength, as well as America's soaring trade deficit in goods, means the world's largest economy can outlast its rivals in the current tit-for-tat battle, presenting Washington with a rare window of opportunity to settle old scores.

As of 12:01 eastern this morning, computers at USA customs should have been reconfigured to apply new tariffs on $34 billion worth of Chinese goods, which include printers, cars and industrial parts.

"The United States violated the [World Trade Organisation] rules and launched the largest trade war in economic history to date", the Commerce Ministry said.

The foreign ministry in Beijing said retaliatory measures "took effect immediately" with state news agency Xinhua confirming they were also 25-per cent tariffs on an equal amount of goods.

U.S. President Donald Trump fired the biggest shot yet in the global trade war by imposing tariffs on $34 billion of Chinese imports.

Companies worry that the spiraling dispute could chill global economic growth, but Asian financial markets took yesterday's developments in stride.

Beijing had earlier released a target list of $34bn worth of imported USA goods including autos and agricultural products also faced 25 percent tariffs. This prompted Beijing to respond in kind with levy tariffs on 545 items of USA imports, including agricultural products, vehicles and aquatic goods - also worth $34 billion, state-run newspaper The China Daily reported Friday.

"If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it's going to have a big impact for both countries", Chen said. "Some firms may cut China out of their supply chain, but in other cases it will make economic sense to move US production overseas".

"But it's the risk of escalation - specifically Trump's $500 billion dollar threat, which would cover almost all of China's exports to the USA - that has analysts anxious", Yanmei said.

Mr Trump has railed against Beijing for intellectual property theft and barriers to entry for United States businesses and a $375 billion United States trade deficit with China.

What's worse is that the Trump administration has paved no way out of this situation, said Matthew Gold, former deputy assistant US trade representative for North America.

Shaun Rein, managing director at the China Market Research Group in Shanghai, said the Chinese government's next play could be to stoke anti-American sentiments among consumers - similar to the boycotts it ordered previous year on South Korea's Lotte Group, which caused dozens of the company's convenience stores to shutter.

But the trade gap between the U.S. and China widened sharply, Commerce Department said. The yuan, which has weakened sharply against a broadly strong USA dollar in recent weeks, was trading at 6.6480 per dollar as of 4:30 p.m.

While both governments were fighting fiercely, netizens in both China and the United States focused their attention on a cargo ship, Peak Pegasus.

"Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it".

Kennedy say he thinks the Trump administration's enthusiasm for the conflict "will erode as the economic pain and political fallout from a trade war begin to take hold".

The US and China imposed sweeping tariffs on one another just after midnight.

Hikaru Sato at Daiwa Securities said markets had already factored in the impact of the first round of tariffs.

The overall monthly USA goods and services trade deficit declined to $43.1 billion in May, from $46.1 billion in April.

Canatella says he hopes the tariffs are resolved before harvest season starts in October. It said American companies want fairer treatment but will be hurt by U.S.

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