The China/US trade war has escalated, with China retaliating to the recent US tariffs and imposing tariffs on $60 billion of US goods.
On Monday, Donald Trump announced $200 billion worth of tariffs on Chinese goods that will be implemented next week after accusing China of “actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me”.
“What China does not understand is that these people are great patriots and fully understand that China has been taking advantage of the United States on trade for many years.”
“They also know that I am the one that knows how to stop it. There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!” he added on Twitter.
Beijing’s plans for tariffs on $60 billion on US goods will include an additional five percent duty on 1,600 products including smaller aircraft, computers and textiles. There will be an extra 10 percent on a further 3,500 items including meat, wheat, wine and chemicals.
Investors were braced for the escalating trade war and impact on the market was minimal.
Chang Wei Liang of Mizuho Bank said: “Given that markets have been bracing for this tariff announcement, we expect a muted rather than dramatic sell-off in Asian equities and currencies today.”
The Trump administration said they will tailor the tariffs so that US consumers do not feel an effect.
Commerce Secretary Wilbur Ross said: “We were trying to do things that were least intrusive on the consumer,” he told CNBC.
“We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the US.”
Keith Wade, the chief economist at Schroders, has said the tariffs are likely to affect US companies with operations in China.
“Very zealous enforcement of regulations could make life quite difficult for companies. America is also probably more dependent on China than the official trade figures suggest,” he said.
Trump has warned of a further $276 billion of tariffs if China chose to retaliate.