China retaliates, announces tit-for-tat tariffs, renews trade war

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China on Tuesday slapped tariffs on U.S. imports in a rapid response to new U.S. duties on Chinese goods, renewing a trade war between the world’s top two economies as President Donald Trump sought to punish China for not halting the flow of illicit drugs.

Trump’s additional 10% tariff across all Chinese imports into the U.S. came into effect at 12:01 a.m. ET on Tuesday (0501 GMT).

On Monday, Trump suspended his threat of 25% tariffs on Mexico and Canada at the last minute, agreeing to a 30-day pause in return for concessions on border and crime enforcement with the two neighboring countries.

China also put several U.S. companies, including Google, on notice for possible sanctions, in a measured response to the sweeping duties on Chinese imports imposed by President Donald Trump.

Beijing’s limited reply to Trump’s imposition of a 10% tariff on all Chinese imports underscored the attempt by Chinese policymakers to engage Trump in talks to avert an outright trade war

Capital Economics, a U.K.-based research firm, estimated that China’s additional tariffs would apply to about $20 billion of annual imports, compared with the $450 billion worth of Chinese goods subject to the Trump tariff that took effect at 12:01 a.m. ET on Tuesday (0501 GMT).

“The measures are fairly modest, at least relative to U.S. moves, and have been calibrated to send a message to the U.S.,” Julian Evans-Pritchard, the firm’s head of China Economics, said in a note.

Trump suggested on Sunday that the European Union would be his next target for tariffs, but did not say when.

Ursula von der Leyen, head of the EU’s executive European Commission, said Brussels would be ready for tough negotiations but underlined the need to lay foundations for a stronger partnership with the EU’s largest trade and investment partner.

“We will be open and pragmatic in how to achieve that. But we will make it equally clear that we will always protect our own interests – however and whenever that is needed,” she said in a speech.

The European Commission and the new U.S. administration have been in contact at a technical level but Von der Leyen and Trump have not spoken directly yet, a Commission spokesperson said.

China’s new measures, announced as the Trump tariff took effect, include a 15% levy on U.S. coal and LNG and 10% for crude oil, farm equipment and a small number of trucks as well as big-engine sedans shipped to China from the U.S.

Reuters , US News

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