Dueling tariffs raise fears of long U.S.-China trade battle

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USA tariffs on $34bn in Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, the world's two biggest economies took a high-stakes turn towards all-out trade conflict.

Aside from the $34 billion in Chinese products, Trump said Thursday, "You have another 16 (billion dollars) in two weeks and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance".

All necessary steps are being taken to stabilize the forex market and enhance liquidity if irregularities or seasonal factors trigger disorder and threaten to hamstring economic development, the Central Bank said.

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports.

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

U.S. tariffs on $34bn (£25.7bn) of Chinese goods have come into effect, signalling the start of a trade war between the world's two largest economies.

The president's tariffs, the PIIE's researchers conclude, are "a prime example of 20th century tools aimed at the knowledge-embodying trade flows of the 21st century".

If the US and China don't solve the trade dispute that began Friday, American soybean farmers could need government aid by fall to ensure their businesses don't collapse, according to Iowa soybean farmer Ron Heck.

Even before the first shots, the prospect of a trade war was worrying investors.

"At that point, the U.S. will be more interested in negotiations, and the Chinese side will also want to come to the table".

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.

Carmaker BMW said it could not absorb all of the 25% tariff on the cars it exports to China from a plant in Spartanburg, South Carolina and would have to raise prices.

Farmer John Duffy loads soybeans from his grain bin onto a truck before taking them to a grain elevator on June 13, 2018 in Dwight, Illinois.

"Our view is that trade war is never a solution", Chinese Premier Li Keqiang told reporters in the Bulgarian capital Sofia, after meeting his counterpart.

This is all the more so at least until the November midterm elections in the U.S. Trump apparently needs the escalation of the trade war in a desperate bid to win the polls. Others will likely decide to hold back on hiring.

Washington has strained relations with potential allies in its dispute with Beijing by raising import duties on steel, aluminum and autos from Europe, Canada, Mexico and Japan.

And China's foreign ministry said retaliatory tariffs of equal size and scope had taken effect "immediately".

The Trump administration is confronting China over tactics it says include stealing technology or pressuring foreign companies to hand it over. Beijing also accused Washington of breaching trade rules of the World Trade Organisation (WTO).

This explains why the US has imposed 25 percent tariffs on Chinese imports such as machinery, electronics and high tech equipment including cars, computer hard drives and LEDs.

The two sides appeared to be making progress on resolving the tariff issue, until the Trump administration announced in May that it had resumed its plans to levy the 25% duty.

"We urge the two governments to come back to the negotiation table", said Zarit. The Trump administration has already rejected a deal for China to enter into long-term contracts to increase purchases of energy and agricultural products from the US.

American apple growers are also concerned about the new export tariffs.