China says it's ready to retaliate on latest USA tariff threat

China Chinese flag        , The Canadian Press

China Chinese flag , The Canadian Press

A full-blown trade war with China and, perhaps, the rest of the world, would significantly raise the price of imported goods and domestic import substitutes in the U.S., lifting the inflation rate and perhaps forcing the Fed to adopt a more aggressive stance on United States rates.

US President Donald Trump on Wednesday ordered his administration to consider more than doubling proposed tariffs on $200 billion (€172 billion) worth of Chinese goods from 10 to 25 percent.

Washington is expected to soon implement more tariffs on $21 billion in additional Chinese goods, which China has already announced it will match immediately.

"The president is going to continue to hold China responsible for their unfair trade practices", said White House press secretary Sarah Huckabee Sanders.

Most analysts now agree that superior levels of US economic growth have bolstered the case for the Federal Reserve to keep raising its interest rate, at a time when the interest rate outlook elsewhere in the world has deteriorated, which has incentivised traders into selling other developed world currencies and buying US Dollars.

Geng said China's door to dialogue on the trade dispute is open, but that it had to be based on mutual respect and equality.

In those circumstances it, too, might find itself confronting a U.S. president who sees trade as a zero sum game and is more concerned about the simple quantum of economic growth than its quality or sustainability.

In addition to Beijing's top-down control, the recent diversification of China's economy and its exports makes the country better positioned to endure a trade war now than it could have in the past, NPR's Jim Zarroli reports.

Trump's threats of higher tariffs weighed on China's financial markets. The government will seek public comment on the higher tariffs. "Regrettably, instead of changing its harmful behaviour, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses", Mr Lighthizer said.

Officials have cautioned that a specific timetable, the issues to be discussed and the format for talks aren't finalised, but added there was agreement among the principals that more discussions need to take place.

While American and Chinese officials have hinted at the possibility of restarting talks in recent weeks, it's been nearly two months since they last held high-level negotiations.

The latest action against China also comes closely behind the August interest rate decision from the Federal Reserve, which saw the United States central bank leave its monetary policy unchanged but reiterate an otherwise bullish outlook for the U.S. economy. Bike Europe has reported that the Chinese government will not tolerate blackmail from the American adminsitration and that they would respond in kind. The implementation could be delayed for weeks as the administration works out the details of which products it will target.

Supply chains preparing for 10% tariffs on their imported goods from China will now have to create contingency plans for more than double that amount. That particular set of tariffs has not yet taken effect.

Until now, China has matched United States tariff moves but not sought to escalate them, which has also probably also emboldened the White House to think it holds a stronger position on the escalation ladder.

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