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It's war: China, US trade blows through tariffs

It's war: China, US trade blows through tariffs

They kicked in just after midnight ET, which is noon in Beijing.

China implemented retaliatory tariffs on USA goods just after noon on Friday, immediately after the US began collecting additional tariffs on Chinese imports, the official Xinhua News Agency reported, citing an unnamed spokesperson from China's General Administration of Customs.

USA officials accuse China of building its industrial dominance by stealing the "crown jewels" of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions.

Beijing insists it's the injured party.

"The United States violated the [World Trade Organisation] rules and launched the largest trade war in economic history to date", the Commerce Ministry said. It accused the United States of "typical trade bullying".

Washington increased tariffs at 12:01 a.m. ET on $34 billion United States worth of Chinese imports, a first step in what could become an accelerating series of tariffs. The collateral damage such trade diversion can create could be extensive.

The report, which shows that unemployment has dropped, also included some numbers that might not be worth the all-caps tweet, including slowed hiring in small businesses and a lack of qualified applicants in some fields, owing, possibly, to wage stagnation.

Bloomberg news reports that talks to avoid a trade war have stalled in part over U.S. demands that China reduce state support for high-tech industries.

The new tariffs could just be the opening skirmish in the trade war, as US President Donald Trump has vowed to hit as much as US$450 billion in Chinese goods, the vast majority of that country's imports. Gregory Daco, head of USA economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 percent through 2020.

"There should be no doubting Beijing's resolve", the newspaper said. Trump's tariffs around going after industrial goods and technology, a move created to take aim at Chinese President Xi Jinping's heralded Made in China 2025 plan.

He added the U.S. is ready to target an additional $200 billion, and then $300 billion more should Beijing retaliate. Trump said. "So we have 50 plus 200 plus nearly 300".

The penalties came in response to $34 billion worth of tariffs the Trump administration placed on Chinese products.

The U.S. goods trade deficit with China totaled $375.23 billion previous year, almost half the U.S. trade deficit globally, according to U.S. Commerce Department data.

"Whether it's through trade war or other means, the end goal is to make China subservient to the United States, " said He Weiwen, vice president of the Center for China and Globalization, in Beijing.

The Trade Partnership, a US-based economics research firm, suggests that the impact will be worse than initially expected, with around 400,000 jobs affected.

Robert Holleyman, Crowell and Moring partner and former Obama trade representative, quoted in India's Economic Times: "If we don't find an exit ramp, this will accelerate like a snowball going down a hill". It also is rooted in the clash between American notions of free trade and Beijing's state-led development model. Chinese exporters have reported U.S. orders fell off ahead of the tariff hike. He noted that the new Russian tariffs will only allow a partial compensation of $87.6 million.

While the USA tariffs aim to cut down the trade deficit, there are worries about how China's retaliatory tariffs will hit the U.S. economy.

On the streets of Beijing, there were some concerns that prices would rise due to the tariffs but also a determination to support the Beijing authorities in the trade war.

The two giant economies appear ready to see which side can endure the most pain.

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