The Trump administration has argued that China has deployed predatory tactics in a push to overtake USA technological dominance. Americans worry that rising Chinese technological prowess might erode US industrial leadership and prosperity.
Hours before Washington's deadline for the tariffs to take effect, US President Donald Trump upped the ante, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of US imports from China previous year.
The US is "opening fire" on the world with its threatened tariffs, China said yesterday, adding that it would respond the instant US measures go into effect as Beijing ramped up the rhetoric in a bitter trade dispute.
"Our commodity market and job market are relatively flexible, and our foreign-related economic sectors' ability to make flexible adjustment is more prominent", said Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, in an interview Thursday with the Chinese financial newspaper Financial News. "So we have 50 plus 200 plus nearly 300", Trump told reporters aboard Air Force One. The Shanghai Composite index fell 1.1 per cent, after reaching more than a two-year low this week, while USA indices are expected to follow suit when they open later today.
The conflict between the world's two biggest economies reflects chronic tension in their relationship as customers, business partners, and increasingly competitors.
USA stocks edged higher on Thursday, however, amid hopes that American trade tensions with Europe may ease after comments from German Chancellor Angela Merkel.
Beijing has announced changes this year including easing limits on foreign ownership in insurance and some other fields.
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From Air Force One, on his way to a rally in Montana, Trump said the U.S. is ready to target an additional US$200 billion in Chinese imports - and then US$300 billion more - if Beijing refuses to yield to United States demands and continues to retaliate.
"You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. Ok?"
Other governments express similar complaints toward Beijing, but Washington has alienated potential allies by raising import duties on steel, aluminum and autos from Europe, Canada, Mexico and Japan. "It is not only because of China's large market size, but it is also because the Chinese market is stable, rational, and committed to the rule of law".
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.
"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.
Chinese exporters of tools, lighting and appliances say US orders have shrunk as customers wait to see what will happen to prices.
The bank estimates that every $US100b of imports affected by the tariffs represents about 0.5 percent of global trade and 0.1 percent of global GDP.
The American Chamber of Commerce in China appealed to both sides to negotiate. Mary Lovely, economics professor at Syracuse University, says that roughly 60 percent of U.S. Companies want fairer treatment but will be hurt by U.S.