The announcement triggered a panic response in global markets and commodities as they witnessed heavy selling, leading to a drop of 1.5 per cent in U.S. stocks.
China retaliated Wednesday against USA plans to apply tariffs on 106 imports by issuing a US$50-billion list of USA goods including soybeans, whisky, beef, industrial chemicals and small aircraft for possible tariff hikes in the escalating dispute.
China insisted on Monday that the trade differences between the two countries should be resolved "through negotiation and dialogue".
Because the actions will not be carried out immediately, there may be room for manoeuvre.
Cellphones, laptops, PCs, servers, and telecoms equipment are all largely exempted under Trump's plan, which still must undergo a public comment period of about two months before being finalised.
So far, it's not a trade war, but few are ruling out the possibility that it could turn into one. "The assumption was China would not respond too aggressively and avoid escalating tensions".
As for the scuffle with China, Kotok said he's hopeful that much of this is bluster from the Trump administration.
Zhu Guangyao, vice minister of finance, said both sides were "showing their swords and making demands", but needed to get back to the negotiating table.
The latest salvo came Wednesday, when the Chinese government proposed new tariffs on dozens of U.S. products including airplanes, cars and soybeans.
The U.S.is the second biggest supplier of soybeans to China, the world's largest consumer of the product. Tianjin is one of the busiest commercial ports in the world and plays a major part in China's import/export trade relations with the worldwide community.
To target China, Trump dusted off a Cold War weapon for trade disputes: Section 301 of the US Trade Act of 1974, which lets the president unilaterally impose tariffs. "They have a lot more to lose in any escalation in this matter".
Those same farmers are anxious aggressive US tariffs targeting countries like China might worsen the problem: soybeans are the leading USA agricultural import to China, meaning any action targeting the product could be devastating. "Now both sides have put up our lists".
Whether or not a trade agreement is eventually struck between the USA and China, heightened trade tensions will be the new normal for the foreseeable future, he says.
That is why, economist Alicia Garcia Herrero and Gary Ng write in the Natixis report, Beijing is willing to strike hard, even at the risk of collateral damage at home. In 2016, 62% of US soybean exports-representing 33 million tonnes-and 77% of USA sorghum exports went to China. The dollar briefly extended early losses, while China's yuan skidded in offshore trade. This was in response to the US decision to impose 25% duty on steel and aluminium products sourced from a group of producers, including China.
Zarit said he still hopes Washington and Beijing will not follow through on their threats.
Chinese foreign ministry spokesman Geng Shuang said China had shown sincerity in wanting to resolve the trade dispute through negotiations.
On April 3, President Trump alleged China forged a $500 billion trade deficit with the USA, just days after the two countries hit each other with tariffs. He added that the company also has a factory in Vietnam that can replace some of its China production capacity if needed.
"The tech industry will feel like overall it dodged a bullet", the source said, but added that traditional industrial goods manufacturers, along with pharmaceuticals and medical device firms, could suffer.
While about a third of US production goes to the Asian country annually, China a year ago bought more of the oilseed from Brazil.
The United States buys little Chinese steel and aluminum following earlier tariff hikes to offset what Washington says is improper subsidies.
The Chinese foreign ministry's spokesperson Lu Kang on Wednesday said, "I must stress again that the USA side released the proposed tariff list in disregard of China's stern representations and on the basis of no facts".
Ever more regrettable, the move will give the world a stronger impression that the USA government abuses global rules whenever it wants.
Another US official, who asked not to be named, told CNBC that "we're focused on long-term fundamentals".
Many products in those segments appear on the list, including antibiotics and industrial robots and aircraft parts.
The USTR list of tariffs includes chemicals, motorcycles, electric cars and electronic components, and would affect Chinese-manufactured flat-panel televisions and light-emitting diodes (LEDs).
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