US President Donald Trump will fire the first salvo against China at midnight in a trade war between the world’s top two economies, as steep American tariffs on Chinese goods worth tens of billions of dollars take effect.
China has vowed to respond “immediately”, with experts warning that tit-for-tat measures between the two financial superpowers will send shockwaves around the global economy and strike at the heart of the world trading system.
The US will levy a 25-percent tariff on more than 800 Chinese product categories worth around $34 billion and has warned of more to come if a trade war escalates.
Trump, Xi: No more jokes, trade war begins midnight
Trump has threatened to progressively ratchet up US penalties to a total of $450 billion in goods — which would represent the lion’s share of all of China’s exports to the United States.
The tariffs target a broad spectrum of Chinese goods — such as passenger vehicles, radio transmitters, aircraft parts and computer hard drives — from industries Washington says have benefited from unfair trade practices.
A second tranche of 284 goods worth $16 billion is currently under review and could be added to the US list.
China is expected to retaliate as soon as the US tariffs go into effect, imposing duties on goods worth roughly the same amount but with a greater emphasis on politically sensitive farm agricultural products.
“The US has provoked this trade war. We do not want to fight it, but in order to safeguard the interests of the country and the people, we have no choice but to fight,” said Gao Feng, spokesman for China’s commerce ministry.
Christine Lagarde, head of the International Monetary Fund, has already sounded the alarm about a tit-for-tat cycle of retaliation, saying it would only create “losers on both sides.”
And Gao noted that of the $34 billion in taxable products on the US list, about $20 billion — or nearly two-thirds — are made by firms with foreign investment, including a “significant portion” from America.
“The US’s measures are essentially attacking the global supply and value chain. Simply put, the US is opening fire on the whole world, and also firing at itself,” Gao said.
Economists have for months warned of the potential damage to the US and global economies from aggressive trade policies and protectionism, which would raise prices and upend global supply chains.
But the Trump team has paid little heed to those warnings, with Commerce Secretary Wilbur Ross this week slamming them as “premature and probably quite inaccurate.”
Trump himself tweeted this week that the economy is doing “perhaps better than ever” even “prior to fixing some of the worst and most unfair Trade Deals ever made by any country.”
Under the banner of his “America First” policy, Trump has also targeted other traditional trade partners of the US, such as the European Union, Japan, Mexico and even Canada.