Trade tensions starting to affect global economy

Trade tensions starting to affect global economy

The Commerce Ministry statement didn't provide details on its retaliation.

"There should be no doubting Beijing's resolve", the newspaper said.

International Trade Center Executive Director Arancha Gonzalez told DW that the world was facing "the largest trade conflict since the Second World War".

The United States is set to impose tariffs on US$34 billion of Chinese imports from 0401 GMT on Friday (12:01pm Singapore time) and has warned it may ultimately target over US$500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China previous year.

"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.

Washington-based think tank the Peterson Institute for International Economics (PIIE) expects U.S. tariffs on Chinese goods, which it says particularly target computers and electronics, to hurt multinationals more than China as well as other firms in Asia.

U.S. tariffs on $34bn (£25.7bn) of Chinese goods have come into effect.

The initiative of US President Donald Trump to impose 25% duties on imports from China, the total value of which is estimated at $34 bln, came into force on Friday.

He threatened a 10 percent levy on an additional $US200b of Chinese goods if Beijng "refuses to change its practices".

China's plans to impose tariffs on hundreds of USA goods targets some top US exports, including soybeans, sorghum and cotton, threatening U.S farmers in states that backed Trump, such as Texas and Iowa.

Trump's tariffs around going after industrial goods and technology, a move created to take aim at Chinese President Xi Jinping's heralded Made in China 2025 plan.

"Our baseline forecast assumes only a modest further escalation in the trade "war" this summer", Bank of America Merrill Lynch said in a Friday note. "Simply put, the United States is opening fire on the whole world, and also firing at itself", Gao said.

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European Union officials are claiming President Trump's new tariffs on auto imports could cost the US economy up to $14 billion. If EU countermeasures on automotive tariffs take the same approach as those on steel, they will amount to around €10 billion.

In the run-up to Friday's tariff implementation, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.

He argues that China should purchase more American goods, and has blamed trade with Beijing on the loss of American jobs throughout the Rust Belt.

Washington increased tariffs at 12:01 a.m.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union.

China's tariffs, on the other hand, will hit agricultural products like soybeans and pork.

But if the scope of the tariffs widened then New Zealand could be affected - either through intermediary goods sold into the United States or China for further processing or because markets were disrupted more broadly.

For the time being, analysts say it's hard to see Washington or Beijing backing down in the dispute.

Although the economy is strong right now, businesses and investors are growing more anxious about President Trump's trade crackdown.

Asked on Thursday whether China would target US-funded businesses in China to counter United States restrictions on Chinese products, Chinese Ministry of Commerce spokesman Gao Feng said it was not part of Beijing's plan and, instead, China might compensate foreign businesses for losses from a trade war.

The two giant economies appear ready to see which side can endure the most pain.

"We will continue to assess the potential impact of the USA -initiated trade war on companies and will help companies mitigate possible shocks". "It's having an impact on businesses that are not making capital investment decisions because of the uncertainty of the situation", she said.

"I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the USA", she said.

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