China announced plans for reciprocal tariffs on $3 billion of imports from the US, including products from steel to pork, after President Donald Trump’s move to order levies on a range of Chinese goods sent markets plunging.
In a statement on Friday, hours after Mr Trump instructed US Trade Representative Robert Lighthizer to slap tariffs on at least $50 billion in Chinese imports, China’s Commerce Ministry said it plans a 25 percent tariff on US pork imports and recycled aluminium, and 15 percent tariffs on American steel pipes, fruit and wine.
China will also pursue legal action against the US at the World Trade Organisation, the statement said, and called for dialogue to resolve the dispute.
Mr Trump signed an executive memo on Thursday instructing USTR to come up with a proposed list of products that will face higher tariffs within 15 days. The move sent US equities tumbling, with the Dow Jones Industrial Average falling 724 points, almost 3 percent, its biggest drop in six weeks. Futures signalled losses greater than 2 percent on Japanese indexes.
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[ Trade war looms as US lays out plans for $50 billion tariffs on China ]
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"This is an opening gambit by China, signalling that the imposition of tariffs by the US will elicit what Beijing views as a proportionate retaliatory response," said Eswar Prasad, a former chief of the International Monetary Fund’s China division and now a professor at Cornell University in Ithaca, New York.
"China has the ability to inflict significant economic harm on US exporters of certain goods and can also use other overt as well as covert actions such as supply chain disruptions to hurt US manufacturers."
The US will impose 25 percent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. USTR will announce the proposed list in the next “several days,” according to the fact sheet.
“This has been long in the making,” Mr Trump said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said.
As he signed the tariffs order, Mr Trump told reporters, “This is the first of many.”
Policy makers across the world are warning of a brewing trade war that could undermine the broadest global recovery in years. Meanwhile, business groups representing companies ranging from Walmart to Amazon are warning US tariffs could raise prices for consumers and sideswipe stock prices.
