Trump's China Trade War Just Escalated by $16 Billion

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China will impose tariffs on an additional $16 billion worth of USA products, officials announced Wednesday, marking the latest parry in an escalating trade war between the two countries.

Washington already imposed 25 percent tariffs on $34 billion in Chinese products on July 6.

China's 25 percent tariffs will apply to US products such as coal, gasoline, vehicles, motorcycles and medical equipment.

China fired back warning it would impose duties on $60 billion in United States goods.


Crude oil prices are under pressure because a tariff on imported USA crude oil means a drop in demand. Chinese data on Wednesday showed exports to the United States rose 13.3% in July to $41.5 billion against a year ago. Since then, Washington and Beijing have raised the stakes by threatening more punitive trade measures in an intensifying dispute that has rattled financial markets anxious about the impact on investment and growth.

However, President Trump is also engaged in trade disputes with other countries, such as Canada and Mexico, and has imposed separate tariffs on items that include steel and aluminium, washing machines and solar panels.

Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment. The USTR is reviewing 10% tariffs on a further $200 billion in Chinese imports, and is even considering raising the rate to 25%.

The tariffs are aimed at industrial, rather than consumer, imports.


China has, in recent years, become a key export market for growing USA energy exports.

It will be the second time the USA slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices.

All China's main state newspapers published a lengthy commentary by the official Xinhua news agency, entitled "declaration", on their front pages. The $16 billion taxed in the latest round brings the total amount of Chinese goods taxed up to $50 billion.

"My expectation is that U.S. tariffs on $250 billion of imports from China will be in effect about a month prior to the November U.S. elections".


China's prohibitive import tariff, which amounts to close to $18 a barrel when crude is at $70, should also deter other Chinese buyers such as state-owned companies Petro China, as well as state-controlled Zhenhua Oil and independent refiners, from importing US crude.

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