WASHINGTON: Steep American tariffs on Chinese goods worth tens of billionsof dollars are due to take effect at midnight Thursday, as US PresidentDonald Trump fires the first salvo in a trade war between the world´s toptwo economies.
Beijing has vowed to retaliate dollar-for-dollar, “immediately” imposingcounter-tariffs on American exports in tit-for-tat measures, with expertswarning the burgeoning conflict will send shockwaves around the globaleconomy and strike at the heart of the world trading system.
In a fresh sign of industry´s unease, a business survey on Thursday againshowed the US services sector was already experiencing supply chaininterruptions and rising costs in anticipation of heightened traderestrictions.
“We´re starting to see signs of inflation, not sharp inflation, butdefinitely inflation,” Anthony Nieves, head of a services industry surveycommittee for the Institute for Supply Management, told reporters.
White House trade officials say the current strength of the US economymeans Washington can withstand more pain than its rivals if the battleescalates further.
But economists also say the trade war comes as the period of synchronizedexpansion among the world´s largest economies, which is bolstering demandfor US goods and services, may be starting to run out of steam, raising therisks that tariffs could harm growth.
But the Trump team has paid little heed to such warnings, with CommerceSecretary Wilbur Ross this week slamming them as “premature and probablyquite inaccurate.”
The US will levy a 25 percent tariff on more than 800 Chinese productcategories worth around $34 billion and has warned of more to come if Chinaretaliates.Trump’s round two to follow
Trump has threatened to progressively ratchet up US penalties to a total of$450 billion in goods — which would represent the lion´s share of all ofChina´s exports to the United States.
The tariffs target a broad spectrum of Chinese goods — such as passengervehicles, radio transmitters, aircraft parts and computer hard drives –from industries Washington says have benefited from unfair trade practices.
A second tranche of 284 goods worth $16 billion is currently under reviewand could be added to the US list.
China is expected to retaliate as soon as the US tariffs go into effect,imposing duties on goods worth roughly the same amount but with a greateremphasis on politically sensitive agricultural products.
“The US has provoked this trade war. We do not want to fight it, but inorder to safeguard the interests of the country and the people, we have nochoice but to fight,” said China´s commerce ministry spokesman Gao Feng.
International Monetary Fund chief Christine Lagarde has already sounded thealarm about the cycle of retaliation, saying it would only create “loserson both sides.”
And Gao noted that of the $34 billion in taxable products on the US list,about $20 billion — or nearly two thirds — are made by firms with foreigninvestment, including a “significant portion” from America.US ´firing at itself´
“The US´s measures are essentially attacking the global supply and valuechain. Simply put, the US is opening fire on the whole world, and alsofiring at itself,” Gao said.
Trump himself tweeted this week that the economy is doing “perhaps betterthan ever” even “prior to fixing some of the worst and most unfair TradeDeals ever made by any country.”
Under the banner of his “America First” policy, Trump has also targetedother traditional trade partners of the United States, such as Canada, theEuropean Union, Japan and Mexico.
Prices are rising, especially for steel and aluminum, and companies arestarting to feel reticent about investments or planning to shift productionoverseas to avoid retaliation against US exports.
There have been immediate job losses at America´s largest nailmanufacturer, Mid-Continent Nail Corporation, due to rising steel pricesamid warnings the company may have to shut down operations altogether.
Iconic American motorcycle brand Harley Davidson has announced plans tomove production overseas to evade the retaliatory tariffs from the EU,drawing a barrage of attacks on Twitter from Trump.
The influential US Chamber of Commerce urged Trump this week to reconsiderhis actions, saying the counter-tariffs now affected $75 billion inAmerican exports and endangered US jobs.
While Trump touts announcements of jobs created in steel plants due to thetariffs, manufacturing industries warn many more jobs will be lost incompanies producing autos, auto parts, appliances and other goods thatdepend on imported components.
One study said as many as 400,000 jobs could be lost. – APP/AFP