China’s assistant commerce minister said on Wednesday that the latest proposed tariffs from the United States harms the World Trade Organization system and hurts globalization.
The Trump administration raised the stakes in its trade war with China on Tuesday, saying it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports.
The Ministry of Commerce’s Li Chenggang said the only correct choice for China-U.S. relations was cooperation, saying these tit-for-tat tariffs will “destroy” trade between the world’s top two economies.
“The outburst of large-scale mutual levying of tariffs between China and the United States will inevitably destroy Sino-US trade,” assistant minister of commerce Li Chenggang told a forum in Beijing.
Li said China’s determination to improve the domestic business environment and its support for the multilateral trading system will not change.

The uneasy calm that had descended on Asian markets was shattered Wednesday after the US threatened to hammer China with tariffs on a further $200 billion of imports, ratcheting up a trade war between the world’s top two economies.
Washington’s announcement comes just days after the two sides exchanged tit-for-tat measures on a range of goods worth tens of billions of dollars, with US Trade Representative Robert Lighthizer blaming Beijing.
“As a result of China’s retaliation (to Friday’s measures) and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports,” he said in a statement.
Tuesday’s announcement is the latest move by Donald Trump in his America First protectionist agenda that has also seen the US target Canada, the European Union and Mexico, who have also hit back with their own measures, sparking global trade war fears.
Trump has previously warned he would hit a total of $450 billion in Chinese goods, which essentially accounts for all the country’s US-bound exports, citing its unfair practices and intellectual property theft.
While observers have been nervously expecting the next salvo in the trade row, the news jarred markets, which had enjoyed some stability this week from upbeat US jobs data and hopes for the upcoming earnings season.
“This latest story will serve as a reality check for the market, reminding investors to reconsider how aggressive they want to be,” Michael O’Rourke, chief market strategist at JonesTrading, told Bloomberg News. “Regardless, the $200 billion in potential additional tariffs is not a surprise. The president made everyone well aware of them.”
The news sent risk assets into a nosedive. Tokyo’s Nikkei ended the morning 1.4 percent lower, with exporters hurt as the safe-haven yen surged against the dollar.
‘Sobering reality’
Hong Kong and Shanghai each lost 1.9 percent, while Seoul shed more than one percent and Singapore gave away 1.5 percent. Sydney retreated 0.6 percent, while Taipei and Jakarta were also sharply lower.
Stephen Innes, head of Asia-Pacific trade at OANDA, said “nothing is written in stone and the tariffs are not set to take effect until September” but the move was still “a very sobering reality check as to just how fragile sentiment around trade war rhetoric is”.
But Ray Attrill, head of forex strategy at National Australia Bank, added that he saw the move as “a negotiating tactic designed to get China back to the negotiating table on trade”, adding that higher tariffs would “inevitably impose significant burdens on US consumers”.
While the dollar slipped against the yen, the rush for safety saw the greenback pile ahead against higher-yielding currencies, with the South Korean won down 0.3 percent, Indonesian rupiah shedding 0.2 percent and Thai baht 0.1 percent lower.
The Chinese yuan dived 0.6 percent, wiping out recent gains, with many warning that Beijing stands to suffer most from a full-blown trade war, which comes just as its economy shows signs of stuttering.
Observers will be keeping a close eye on the release Friday of Chinese trade data, which will give an idea about how the row has affected the country’s exports so far.
Oil prices also sank on concerns that a trade war could hit demand for the commodity.
Key figures around 0230 GMT
Tokyo – Nikkei 225: DOWN 1.4 percent at 21,891.20 (break)
Hong Kong – Hang Seng: DOWN 1.9 percent at 28,131.96
Shanghai – Composite: 1.9 percent at 2,774.22
Dollar/yen: DOWN at 110.87 yen from 111.26 yen
Pound/dollar: DOWN at $1.3258 from $1.3279 at 2045 GMT
Euro/dollar: DOWN at $1.1725 from $1.1746
Oil – West Texas Intermediate: DOWN 65 cents at $73.46 per barrel
Oil – Brent Crude: DOWN $1.03 at $77.83 per barrel
New York – Dow: UP 0.6 percent at 24,919.66 (close)
London – FTSE 100: UP 0.1 percent at 7,692.04 (close)
— AFP

The United States late Tuesday announced it was starting the process to slap 10 percent tariffs on another $200 billion in Chinese export goods as soon as September, escalating the trade war between the world’s two largest economies.
President Donald Trump vowed to hit back on a growing list of products after China retaliated in kind for the first round of 25 percent tariffs on $34 billion worth of imports that Washington imposed last week.
If he goes ahead it would mean thousands of products from fish to chemicals, metals and tires would face new taxes.
US Trade Representative Robert Lighthizer said Washington did a thorough investigation to justify imposing tariffs on $50 billion worth of imports to compensate for the harm to the US economy caused by China’s unfair trading practices, including theft or forced transfer of American technology.
But China has rebuffed US complaints and denied any harm was done to US companies, and instead retaliated “without any international legal basis or justification,” Lighthizer said.
“As a result of China’s retaliation and failure to change its practices, the president has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports,” he said in a statement.
USTR will hold hearings in late August on the list of targeted products, and an administration official said it would take about two months to finalize, at which point Trump would decide whether to go ahead with the tariffs.
The goal is to bring the total amount of Chinese imports up to 40 percent of the total imported from the Asian power, since the US products hit by Beijing’s retaliation represent that share of exports, an official told reporters in a conference call.
This dispute comes alongside the US confrontation with other allies and major trading partners including Canada, Mexico and the European Union, for the steep tariffs imposed on steel and aluminum. Those nations also have retaliated.
Expanding trade war
The trade confrontation between Washington and Beijing has been escalating for months, despite Trump’s repeated statements that he has a good relationship with China’s President Xi Jinping.
China accused the US of starting “the largest trade war in economic history,” after the first round of tariffs took effect last week.
But Trump has said continuously that China has taken advantage of the US economy, and he has vowed to hit nearly all the country’s products with tariffs, as much as $450 billion.
The US trade deficit in goods with China ballooned to a record $375.2 billion last year, stoking his anger over trade policies.
For now, the USTR continues to work on the process of finalizing an additional $16 billion in goods to face 25 percent tariffs to bring the total up to $50 billion. Beijing has vowed to retaliate dollar-for-dollar.
The new list of goods to face 10 percent punitive duties includes frozen meats, live and fresh fish and seafood, butter, onions, garlic and other vegetables, fruits, nuts, metals, and a massive list of chemicals, as well as tires, leather, fabrics, wood and papers.
The officials said they tried to target goods that would reduce the harm to US consumers.
They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory.
“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said. “Unfortunately, China has not changed its behavior.”
But he added that “the United States is willing to engage in efforts that could lead to a resolution of our concerns.” — AFP

Tesla unveiled plans on Tuesday to build a factory in Shanghai to dramatically increase its production capacity, with boss Elon Musk making his electric-car company’s biggest overseas move yet just as a US-China trade battle heats up.
Musk said the plant, which has been in the works for a year, would eventually have an annual production capacity of 500,000 cars, and he hoped it would be “completed very soon.”
The announcement of the new Tesla venture comes as US companies face pressure from US President Donald Trump to keep manufacturing jobs at home, and as Beijing and Washington spar over terms of a trade in a fight that only last weekend significantly hiked the price of imported Teslas sold in China.
Analysts noted that the announcement included no details about how much the plant would cost or how it would be financed.
China already is the world’s biggest electric car market and is expected to grow further due in part to favorable government policies for the environmentally-friendly vehicles.
“Shanghai will be the location for the first Gigafactory outside the United States,” Musk said in a statement released by the company and Shanghai’s government.
The plant, located in the Lingang district, “will be a state-of-the-art vehicle factory and a role model for sustainability. We hope it will be completed very soon.”
A Tesla spokesperson said the company expects construction to begin “in the near future,” with production beginning roughly two years later and another three more years before it reaches full production.
“Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here,” the spokesperson said.
“Today’s announcement will not impact our US manufacturing operations, which continue to grow.”
Pulling the trigger
Anticipation about a potential big Tesla investment had bubbled over the past year. The company last month told shareholders it was working with officials in Shanghai to establish a plant to build electric cars and battery packs intended for China.
But the announcement comes at a sensitive time US-Chinese trade relations.
Trump has for years slammed what he describes as Beijing’s underhand economic treatment of the United States, with the US trade deficit in goods with China ballooning to a record $375.2 billion last year.
Following months of tension, start-stop negotiations and some Chinese concessions, the US on Friday pulled the trigger on 25 percent duties on about $34 billion in annual imports of Chinese machinery, electronics and high-tech equipment, including autos, computer hard drives and LEDs.
The move triggered immediate and dollar-for-dollar retaliation by China. Those tariffs raised the price on Tesla Model S to $142,000 from about $115,000, according to 24-7 Wall Street.
“It was long a plan and expectation that Tesla would open a plant in China,” said Efraim Levy, an analyst at CFRA Research. “It happens to be that now is when you have the trade altercation going on. I think it’s really coincidental.”
Levy said hopefully the trade spat would be resolved by early next year, but “by putting a plant in China it prevents future tariff increases from being impactful.”
China typically requires foreign automakers to set up joint ventures with Chinese firms when establishing manufacturing plants. But the joint statement described the plant as a Tesla “wholly-owned Gigafactory.”
Analysts noted that the announcement did not estimate the cost of the plant, or how it would be financed.
A note from 24-7 Wall Street said the $2.7 billion in cash on Tesla’s balance sheet at the end of the first quarter hardly seems like enough,” but the company likely would not have trouble raising funds in China.
Tesla announced in June it was cutting nine percent of its workforce, or almost 4,000 jobs, in an effort to boost profitability. Musk said at the time the job cuts would not affect an ambitious build-out program of its Model 3 sedan that has been closely monitored by Wall Street.
Domestic and foreign automakers have been racing to grab a piece of the Chinese electric-car sector, which is expected to continue to grow rapidly as the government pushes cleaner technologies, partly to help combat chronic air pollution. — AFP