President Donald Trump moved closer to an all-out trade war with China on Friday by announcing new 25 percent tariffs on $50 billion worth of technology imports, dealing a blow to Chinese industries and prompting retaliation against US products.
Washington has completed a second list of possible tariffs on another $100 billion in Chinese goods, in the expectation that China will respond to the initial US tariff list in kind, sources told Reuters.
China will impose duties with "equal scale, equal intensity" on imports from the USA and all the consensus the two sides reached earlier will lose effect, the Commerce Ministry said in a statement on its website yesterday.
"All economic and trade agreements reached by previous negotiations will be nullified at the same time".
And the China trade offensive is only one side of Trump's multi-front battle with all major United States economic partners.
According to the state media, Xinhua, the Chinese government imposed additional duties of 25 per cent on 659 items of American products, while also revealed a list of items which will be subjected to additional tariffs.
And USTR added tariffs on another 284 product lines, valued at $16 billion, targeting semiconductors, a broad range of electronics and plastics that it said benefited from China's industrial subsidy programs, including the "Made in China 2025" plan, aimed at making China more competitive in key technologies such as robotics and semiconductors.
Some companies that source materials from China could eventually look for suppliers in other Asian countries with low labor costs including Vietnam, the Philippines and Bangladesh, but many will take a wait-and-see approach because it takes times to rewire supply chains, said Erik Lundh, an economist specializing in China for The Conference Board, a major business group.
"(China) welcomes dialogue and is not afraid of trade war threats". China's interest in USA lobster has grown exponentially in recent years, and selling to China has become a major focus of the lobster industry.
The US president yesterday unveiled the 25 per cent tariffs, created to combat what he says is China's theft of America's intellectual property.
"America can no longer tolerate losing its technology and intellectual property through unfair economic practices", he said.
Is there a way for China to head off these tariffs?
Vegetables took up 14.6 percent of China's imports from the U.S.in 2016, while fuel was 2.3 percent, and transportation products - mostly airplanes - accounted for 9.6 percent, according to the World Bank.
USA officials say the tariff hike targets goods that might benefit from Chinese theft of technology or pressure on foreign companies to hand it over in exchange for market access. "We deeply regret that the United States has disregarded the consensus it has formed and flip-flopped, provoking a trade war".
"China has noticed the USA statement which said Washington would continue to impose additional tariffs if China takes retaliatory measures".
The US wants China to stop practices that allegedly encourage transfer of intellectual property - design and product ideas - to Chinese companies, such as requirements that foreign firms share ownership with local partners to access the Chinese market.
The United States has already imposed tariffs on steel and aluminum from Canada, Mexico and the European Union. It's quite possible China may call Trump's bluff, knowing how much the president enjoys a rising stock market and strong USA economy. Critics say Trump gained little from his meeting this past week with North Korean leader Kim Jong Un, though the outcome of that bargain is still up in the air.