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Trade war ignites as China retaliates against US tariffs

WASHINGTON: Ignoring US President Trump’s warnings not to retaliate against American tariffs on Chinese products, Beijing did just that on Monday, slapping tariffs on $60 billion worth of American imports and spooking the world bracing for a trade war.

“China will never succumb to foreign pressure,” the country’s foreign ministry said in a statement about the retaliatory move that will kick in tariffs against more than 5000 US products on June 1. “We are determined and capable of safeguarding our legitimate rights and interests. We still hope that the US will meet us halfway.”

For now, though, the markets tanked, the Dow Jones index plunging by 600 points at the time of writing this amid fears of a worldwide ripple effect in the days to come.

China’s response came after a series of Monday morning tweets by Trump in which he alternately tried to shame and cajole Beijing into a deal, which he suggested was almost reached before it backed out.

“I say openly to President Xi & all of my many friends in China that China will be hurt very badly if you don’t make a deal because companies will be forced to leave China for other countries. Too expensive to buy in China. You had a great deal, almost completed, & you backed out!” Trump wrote, giving his version of the breakdown in both talks and trust.

“Many Tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly! There will be nobody left in China to do business with. Very bad for China, very good for the USA! But China has taken so the advantage of the US for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate-will only get worse!” he warned.

But the US President seemed to discount the fact that few countries in the world, even relatively weaker ones such as Iran and Venezuela much less a strong China, would roll over in the face of public castigation. Beijing’s response and statements suggested precisely that – and many Trump critics in the US also maintained that finesse would have worked better.

However, Trump is clearly emboldened by the strength of the US economy and is actually arguing that the tariff war has helped it and could eventually benefit Americans even more, though many economists, including his own aides, are saying it is the American businesses and consumers who will eventually pay for the tariffs, not China, which will also suffer on account of decreased exports to the US

“Their (sic) is no reason for the US Consumer to pay the Tariffs, which take effect on China today. This has been proven recently when only 4 points were paid by the US, 21 points by China because China subsidizes product to such a large degree,” Trump maintained in a series of tweets littered with typos, arguing, “Also, the Tariffs can be completely avoided if you by (sic) from a non-Tariffed Country, or you buy the product inside the USA (the best idea). That’s Zero Tariffs.”

“The unexpectedly good first quarter 3.2% GDP was greatly helped by Tariffs from China. Some people just don’t get it!” he added.

Departing significantly from the rosy picture Trump is painting, his economic advisor Larry Kudlow acknowledged that companies and consumers in both countries will feel the pain, but suggested Washington held the trump card.

“Politically, I think the country is completely behind the president and his tough approach on China and, in fact, as you know, leading Democrats such as Sen. Schumer and others have supported the president in this battle,” he pointed out.

But some experts are warning that Trump’s base constituency itself will soon feel the pain as China tariffs US goods and cuts down on imports of US farms produce and products such as Boeing aeroplanes. Beyond that, American consumers will also begin shelling out more for everything from smartphones to sneakers, from TV sets to toasters that China exports in huge numbers to the US in a trade layout that has devastated American manufacturing but has given Americans cheap and affordable goods and products.

By one estimate, an American family of four will pay up to $800 annually on goods and products on account of the tariff war.

News credit : Indiatimes