China urges U.S. to 'pull back from brink' as Trump unveils tariffs





By Ryan Woo and Adam Jourdan

BEIJING/SHANGHAI (Reuters) - China urged the United States on Friday to "pull back from the brink" as President Donald Trump's plans for tariffs on up to $60 billion in Chinese goods brought the world's two largest economies closer to a trade war.

The escalating tensions between Beijing and Washington sent shivers through financial markets as investors foresaw dire consequences for the global economy if trade barriers start going up.

Trump is planning to impose the tariffs over what his administration says is misappropriation of U.S. intellectual property. A probe was launched last year under Section 301 of the 1974 U.S. Trade Act.

"China doesn't hope to be in a trade war, but is not afraid of engaging in one," the Chinese commerce ministry responded in a statement.

"China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place."

In a presidential memorandum signed by Trump on Thursday, there will be a 30-day consultation period that only starts once a list of Chinese goods is published.

That effectively creates room for potential talks to address Trump's allegations on intellectual property theft and forced technology transfers.

Trump said he views the Chinese as "a friend", and both sides are in the midst of negotiations.

Meantime, China showed readiness to retaliate by declaring plans to levy additional duties on up to $3 billion of U.S. imports including fresh fruit, wine and nuts in response to imports tariffs Trump announced earlier this month on steel and aluminium, which were due to go into effect on Friday.

The inevitable fall in demand from a full-blown trade war would spell trouble for all the economies supplying the United States and China.

Feeling the chill, MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2.4 percent, tracking a large overnight fall in Wall Street shares, but perceived safe havens such as government bonds gained.

"The upshot is that today's (U.S.) tariffs amount to no more than a slap on the wrist for China," Mark Williams, Chief Asia Economist at Capital Economics, wrote in a note. "China won't change its ways. Worries about escalation therefore won't go away."

Williams estimated that the $506 billion that China exported to the United States drove around 2.5 percent of its total gross domestic product, and the $50-60 billion targeted by the U.S. tariffs contributed just around 0.25 percent.

Trump, however, appears intent on fulfilling election campaign promises to reduce the record U.S. trade deficit with China.

U.S. multi-nationals at a business gathering in Shanghai were warned by Stephen Roach, a Yale University economist, "to prepare for the worst" and make contingencies until calmer heads prevail.

Roach said he could foresee "the Chinese government moving to restrict, in some form or another, the financial as well as the supply chain activities of American companies operating in this country."


LOW HANGING FRUIT

Alarm over Trump's protectionist leanings mounted earlier this month after he imposed hefty import tariffs on steel and aluminium under Section 232 of the 1962 U.S. Trade Expansion Act, which allows safeguards based on "national security".

On Friday, Trump gave Canada, Mexico, Argentina, Australia, Brazil and South Korea and the European Union temporary exemptions. China was not exempted even though it was a far smaller supplier than Canada or South Korea.

Also omitted from the exemption list was U.S. ally Japan, though a government spokesman said Tokyo would press to be included. And Finance Minister Taro Aso expressed empathy with Washington regarding the importance of protecting intellectual property.

China's retaliation against the U.S. tariffs on steel and aluminium appeared restrained.

Targeting $3 billion of U.S. imports, China has drawn a list of 128 U.S. products that could be hit with tariffs if the two countries are unable to reach an agreement on trade issues, the ministry said.

The commerce ministry said China was considering implementing measures in two stages: first the 15 percent tariff on 120 products including steel pipes, dried fruit and wine worth $977 million, and later, the higher 25 percent tariff on $1.99 billion of pork and recycled aluminium.

U.S. wine exports to China last year were $79 million, according to data from the U.S. Wine Institute, which represents Californian wine makers.

The fruit growers of California, Florida, Michigan and Washington all stood to lose as China's list also included close to 80 fruit and nut products. U.S. exports of fruits, frozen juices and nuts to China amounted to $669 million last year, and it was the top supplier of apples, cherries, walnuts and almonds.

"With the restrained response, China hopes Trump can realise his errors and mend his ways," said Xu Hongcai, deputy chief economist at the China Centre for International Economic Exchanges, a Beijing think tank.

"If we really want to counter, the strongest response would be to target soybean and automobiles," said Xu. "China is 'drawing its bow but not firing. We still have some cards to play."



(Additional reporting by Wang Jing, Lusha Zhang, John Ruwitch, Elias Glenn, Dominique Patton, Josephine Mason and Meng Meng; Editing By Simon Cameron-Moore)

COMMENTS

More Related News

The Latest: Many in caravan inclined to take Mexico asylum
The Latest: Many in caravan inclined to take Mexico asylum
  • World
  • 2018-10-20 17:56:53Z

TECUN UMAN, Guatemala (AP) - The Latest on a caravan of Central American migrants hoping to reach the United States (all times local):

Saudi account of Khashoggi killing is widely denounced
Saudi account of Khashoggi killing is widely denounced
  • World
  • 2018-10-20 17:48:05Z

ISTANBUL (AP) - Turkey will "never allow a cover-up" of the killing of Saudi journalist Jamal Khashoggi in Saudi Arabia's consulate in Istanbul, a senior official in Turkey's ruling party said Saturday, reflecting international skepticism over the Saudi account that the writer died

At dueling events, Trump and Biden keeping focus on Nevada
At dueling events, Trump and Biden keeping focus on Nevada

President Donald Trump and former Vice President Joe Biden, a potential White House challenger in 2020, are making election pushes several hundred miles apart from each other in pivotal Nevada, where early voting was beginning Saturday. Trump was wrapping up a visit to Western states with an afternoon

Pressure turns to Mexico as migrant caravan heads for border
Pressure turns to Mexico as migrant caravan heads for border
  • World
  • 2018-10-18 23:41:59Z

GUATEMALA CITY (AP) - As some 3,000 Hondurans made their way through Guatemala, attention turned to Mexico, after U.S. President Donald Trump threatened Thursday to close the U.S.-Mexico border if authorities there fail to stop them - a nearly unthinkable move that would disrupt hundreds of thousands

Kelly, Bolton Get in Profane Shouting Match Outside the Oval Office
Kelly, Bolton Get in Profane Shouting Match Outside the Oval Office

The chief of staff, John Kelly, and the national security adviser, John Bolton, fought over immigration and border crossings, including the performance of the Homeland Security Department under Secretary Kirstjen Nielsen, one person familiar with the matter said.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Latin America

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.