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U.S. tech firms may feel brunt of China's trade counter attack

12 July 2018

"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", U.S. Trade Representative Robert Lighthizer said.

The Trump administration is readying tariffs on another $US200 billion of Chinese imports - ranging from burglar alarms to mackerel - escalating a trade war between the world's two biggest economies.

Beijing warns of "necessary countermeasures" as Washington announces 10 percent tariffs on Chinese goods, upping the ante in its trade dispute with the Asian economic giant.

If China responds with tariffs on energy, this could cut sales of USA energy goods, analysts and executives told Reuters last month, when Beijing first threatened to slap tariffs on us energy.

The tech sector, more broadly, will suffer from tariffs due to the nature and complexity of the worldwide supply chain that it relies on.

'We can not turn a blind eye to China's mercantilist trade practices, but this action falls short of a strategy that will give the administration negotiating leverage with China while maintaining the long-term health and prosperity of the American economy'. Beijing did not retaliate when the U.S. placed tariffs on steel and aluminum products.

China has become a key trade partner for USA energy exports, and potential tariffs on US energy goods could hurt USA producers and industries.

U.S. officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminum.

Last week, China and the USA imposed another round of tariffs on each other, and the USA said on Tuesday that it could impose tariffs on an additional US$200 billion worth of Chinese imports.

The initial USA tariff list focused on Chinese industrial products in an attempt to limit the impact on American consumers.

The Chinese commerce ministry has slammed the U.S. plan to impose tariffs on additional imports worth some $200 billion as totally unacceptable, promising a mirror response to defend its national interests.

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Although it was not a direct reaction to the new move from Trump's administration, the official English-language newspaper China Daily said in an editorial that Beijing had to stand up to Washington.

"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".

The tariffs initiated by U.S. President Donald Trump have also drawn criticism from lawmakers in his own Republican Party, as well as from U.S. trade groups anxious about higher costs for businesses and consumers.

'Tonight's announcement appears reckless and is not a targeted approach, ' Senate Finance Chairman Orrin Hatch said.

In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent, while the main indexes in Hong Kong and Shanghai fell more than 2 percent.

The US Chamber of Commerce, which has supported Trump's tax cuts and efforts to reduce regulation of businesses, also criticised the administration's move.

"Unfortunately, China has not changed its behavior - behavior that puts the future of the US economy at risk", he continues. "Tariffs threaten to boomerang on the very workers they're supposed to help, and will only further undermine the confidence manufacturers need to make investments in new equipment, facilities and people".

'Tariffs on $200 billion in Chinese products amounts to another multibillion-dollar tax on American businesses and families, ' trade lawyer Scott Lincicome said.

The Office of the US Trade Representative is seeking submissions on the latest proposed tariffs and will conduct hearings in late August, making September the earliest possible implementation date for the new import taxes.

TRT World's Kevin McAleese reports from Washington DC.

U.S. tech firms may feel brunt of China's trade counter attack