President Donald Trump`s administration said on Wednesday talks with Beijing could resolve an escalating U.S.-China trade fight after China retaliated against U.S. proposals to slap tariffs on $50 billion in Chinese goods by targeting key American imports with similar duties.
Just 11 hours after the Trump administration proposed 25 percent tariffs on some 1,300 Chinese industrial, technology, transport and medical products, China responded with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals.
Global stock markets, fearful of a trade war between the world`s two economic superpowers, were shaken by the salvos between China and the United States but have since regained some lost ground. [MKTS/GLOB]
Trump, who contends his predecessors served the United States badly in trade matters, rejected the notion that the tit-for-tat moves amounted to a trade war.
"We are not in a trade war with China that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.," he wrote on Twitter.
Asked by reporters outside the White House whether the United States could lose a trade war, Trump`s top economic adviser, Larry Kudlow, said, "No. I don`t see it that way. This is a negotiation, using all the tools."
"What you`ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There`s already back-channel talks going on," Kudlow separately told Fox Business Network.
U.S. Commerce Secretary Wilbur Ross told CNBC, "It wouldn`t be surprising at all if the net outcome of all this is some sort of a negotiation."
If the two countries are unable to come up with a way to settle the dispute, a full-scale trade war could destabilize U.S.-Chinese commercial ties, an important component of the global economy.
The trade actions will not be carried out immediately, so there may be room for manoeuvre. Publication of Washington`s list starts a period of public comment and consultation expected to last around two months. The effective date of China`s moves depends on when the U.S. action takes effect.
China`s quick and muscular response to the U.S. tariffs initially spurred a U.S. stock market selloff with the Dow Jones Industrial Average <.dji> falling 2 percent at the open, but the indicator was down just 0.38 percent in early afternoon trading.
Shares of aerospace giant Boeing Co
The S&P 500 <.spx> was last down 0.20 percent. The U.S. dollar also fell and oil dropped to a two-week low.
While Washington targeted products that benefit from Chinese industrial policy, including its "Made in China 2025" initiative to replace advanced technology imports with domestic products in strategic industries such as advanced IT and robotics, Beijing`s appeared tailored to inflict political damage.
Washington`s list was filled with many obscure industrial items, but China`s strikes at signature U.S. exports, including soybeans, frozen beef, cotton and other agricultural commodities produced in states from Iowa to Texas that voted for Trump in the 2016 presidential election.
The list extends to tobacco and whiskey, both produced in states including Kentucky, home of U.S. Senate Majority Leader Mitch McConnell, like Trump a Republican.
One of the first opportunities for the United States and China to discuss the dispute is during an April 20-22 meeting of the International Monetary Fund and World Bank in Washington, where finance officials traditionally meet on the sidelines to discuss bilateral issues.
A U.S. official, speaking on condition of anonymity, said no talks had been scheduled yet between U.S. Treasury Secretary Steve Mnuchin and his Chinese counterpart during the IMF gathering.
The possibility of an escalating U.S.-China trade war will result in "a bumpy ride" for the U.S. economy, said James Bullard, president of the Federal Reserve Bank of St. Louis.
U.S.-made goods that appear to face added tariffs in China, based on an analysis of Beijing`s list, include Tesla Inc
Information technology products, from cellphones to personal computers, largely escaped the latest salvo of U.S.-China trade measures despite accounting for a significant portion of bilateral trade.
China ran a $375 billion goods trade surplus with the United States in 2017. Trump has demanded that the China cut the trade gap by $100 billion.`WEAKEN OUR WILL`
"China is also trying to weaken our will by targeting certain segments of our economy," White House trade adviser Peter Navarro told National Public Radio. "But let`s remember: we buy five times more goods than they buy from us. They have a lot more to lose in any escalation in this matter."
Trump last month said that "trade wars are good, and easy to win," but key fellow Republicans expressed unease over the latest developments. McConnell said he was nervous about the "growing trend in the administration to levy tariffs" that could become a "slippery slope," while Senator Chuck Grassley, whose home state of Iowa is a major agricultural producer, said "farmers and ranchers shouldn`t be expected to bear the brunt of retaliation for the entire country."
Beijing`s list of 25 percent additional tariffs on U.S. goods covers 106 items with a trade value matching the $50 billion targeted on Washington`s list, China`s commerce and finance ministries said.
Trump`s tariff list included more than 1,300 products but for 141 of them, the United States did not import anything from China last year. While large aircraft, communication satellites and military weapons like rocket launchers were among the targeted products, America had zero imports of these goods from China last year, according to a Reuters analysis.
China`s tariff list covers aircraft that would likely include older models such as Boeing Co`s workhorse 737 narrowbody jet, but not newer models like the 737 MAX or its larger planes.
The U.S. move was broadly flagged last month and is aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfer from U.S. companies to Chinese competitors, charges Chinese officials deny.
Foreign ministry spokesman Geng Shuang said China had shown sincerity in wanting to resolve the dispute through negotiations.
"But the best opportunities for resolving the issues through dialogue and negotiations have been repeatedly missed by the U.S. side," he told a regular briefing on Wednesday.
The U.S. tariff list followed China`s imposition of tariffs on $3 billion worth of U.S. fruits, nuts, pork and wine to protest U.S. steel and aluminium tariffs imposed last month by Trump.
Many consumer electronics products such as cellphones made by Apple Inc
GRAPHIC - U.S. imports from China: http://tmsnrt.rs/2FMsz1Q
GRAPHIC - U.S. trade in goods with China: http://tmsnrt.rs/2GcOZIH
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)