China retaliates as trade war starts; what will Trump do next?

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The United States and China slapped tit-for-tat duties on $34 billion worth of each other's imports on Friday, with Beijing accusing Washington of triggering the "largest-scale trade war" as the world's two biggest economies sharply escalated their conflict.

Beijing said it was "forced to take necessary countermeasures" after Trump imposed 25% duties on about $34 billion in Chinese machinery, electronics and high-tech equipment including autos, computer hard drives and LEDs.

Retaliatory measures "took effect immediately", said a Chinese foreign ministry spokesman, Lu Kang.

The imposition of the tariffs had little impact on Asian stock markets.

Japan's main stock index, the Nikkei 225, gained 1.1 per cent while the Shanghai Composite Index added 0.5 per cent. Hong Kong's Hang Seng also rose 0.5 per cent.

The United States is set to impose tariffs on US$34 billion of Chinese imports from 0401 GMT on Friday (12:01pm Singapore time) and has warned it may ultimately target over US$500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China a year ago.

He spoke to reporters who flew with him to Montana for a campaign rally.

After that, the hostilities could intensify: Trump said the U.S.is ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing does not yield to USA demands and continues to retaliate.

China implemented retaliatory tariffs on some imports from the USA on Friday, immediately after new US duties had taken effect.

Moreover, it's not inherently misguided to get tough with China over its relentless mercantilism, which has long disadvantaged USA businesses and which more recently took the form of a "Made in China 2025" policy that seeks dominance for the People's Republic in cutting-edge technology.

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The White House previously described the situation as a "trade dispute" that's justified because of China's own aggressive trade practices and alleged theft of American intellectual property - claims Chinese officials have denied.

Chinese Commerce Ministry spokesman Gao Feng said that the proposed US tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.

Xinhua, the Chinese state-run press agency: "Such a protectionist tool will directly impact enterprises worldwide, including those of the United States, and does not jibe with global rules on resolving trade problems". "Any unilateral pressure will be futile".

Trump has for years slammed what he describes as Beijing's underhand economic treatment of the United States, with the U.S. trade deficit in goods with China ballooning to a record US$375.2 billion last year.

"This is a potential concern for the outlook of corporate investment and consumption around world", said Hui.

The state-run China Daily fumed: "In effect, the Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China".

Economists have for months warned of the potential damage to the USA and global economies from aggressive trade policies and protectionism, which would raise prices and upend global supply chains.

In the run-up to Friday's tariff implementation, there was no sign of renewed negotiations between United States and Chinese officials, business sources in Washington and Beijing said. But after three rounds of negotiations between the two sides, including a Chinese pledge to significantly increase purchases of American products, Trump chose to go ahead with the tariffs.

When Donald Trump became US President he promised to "Make America Great Again". "We urge the two governments to come back to the negotiation table".

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