China accuses Trump of launching ‘the biggest trade war in economic history’

China flag and the U.S. Stars and Stripes fly on a lamp post Pennsylvania in Washington

China flag and the U.S. Stars and Stripes fly on a lamp post Pennsylvania in Washington

However, while no details have been provided as yet, it looks like a Chinese retaliation may be in the works.

Beijing has said it will retaliate in equal measure.

Société Générale economists Stephen Gallagher and Yao Wei, quoted in the South China Morning Post regarding the effects on the rest of the world: "One channel of spillovers is via weakened demand from the two largest economies in the world; and the other equally important and likely quicker transmission would be along global value chains".

The big question is how far the hostilities between Washington and Beijing will go.

That came after President Trump warned that in the end, the US could target over $500 billion worth of Chinese goods - roughly the amount, in total, that the USA has imported from China previous year. Others say they are turning their focus to Chinese consumers.

After that, the hostilities could intensify: Trump said the ready to target an additional $200 billion in Chinese imports - and then $300 billion more - if Beijing refuses to yield to USA demands and continues to retaliate.

Gao said China's foreign trade was expected to continue on a stable path in the second half of the year, though investors fear a full-blown Sino-American trade war would deal a blow to Chinese exports and its economy. The president said USA tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.

But it remained to be seen whether the American president would carry out recent threats to respond to any Chinese retaliation with maximum pressure - raising U.S. duties on Chinese goods in increments of $200 billion until virtually all the goods America buys from its largest trading partner are subject to duties.

On Thursday, Trump warned that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China a year ago.

Trump has railed against Beijing for intellectual property theft and barriers to entry for USA businesses and a $375 billion US trade deficit with China.

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Trump said in March that trade wars are good and easy to win.

China's imports from the USA were just US$130 billion past year and so Beijing does not have the capacity to hit back in kind, raising speculation it could respond by creating administrative headaches for companies in China. Given the 12-hour time difference, that would have put its implementation ahead of Washington's.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union. Chinese exporters have reported US orders fell off ahead of the tariff hike.

The commerce ministry on Friday criticised Washington for "trade bullying" following the tariff hike that took effect at noon Beijing time in a spiraling dispute over technology policy that companies worry could chill global economic growth. "It's very hard to see this happening in the current environment".

China's officials have previously said they would respond by imposing higher levies on goods ranging from American soybeans to pork, which may in turn prompt Trump to raise trade barriers even higher.

Today's tariffs could just be the opening skirmishes 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 imports.

The two giant economies appear ready to see which side can endure the most pain. "And the impact on USA business, in my estimation, will be substantial".

"They're holding everything. because there's uncertainty", he said.

"We urge the two governments to come back to the negotiation table", said Zarit. "For example, my vehicle is from America".

"I will try my best to support domestic products".

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