Experts warn trade battle with China could last into 2019

U.S. tariffs take effect, China warns of 'counterattack'

U.S. tariffs take effect, China warns of 'counterattack'

They kicked in just after midnight ET, which is noon in Beijing.

The Chinese Foreign Ministry said "retaliatory tariffs" took effect.

Trump has for years slammed what he describes as Beijing's underhanded economic treatment of the United States in terms of trade, with the U.S. trade deficit in goods with China ballooning to a record $375.2 billion last year.

Beijing insists it's the injured party.

"China promised to not fire the first shot, but to defend national core interests and the interests of the people it has no choice but to strike back as necessary", the Commerce Ministry said in a statement.

The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.

That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States past year.

Ford Motor Co said on Thursday that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.

In 1900, tariffs accounted for about 30% of the total value of USA imports, as the country was trying to restrict imports and develop its young industrial sector.

Chinese retaliatory tariffs on $5.4 billion worth of US chemicals goods "are direct hits" on recent production expansions, said Ed Brzytwa, director of worldwide trade for the American Chemistry Council.

Economists say that if the back-and-forth stops there, the overall impact on both economies will be minimal even though some industries will suffer.

Mark Williams, chief Asia economist at Capital Economics, said Beijing could arrange a "propaganda campaign, which allows officials to remain at arm's length from the resulting disruption to sales". On Thursday, he suggested the possibility of tariffs on nearly $500 billion more of Chinese goods.

"The US has said that it is prepared to put traffis on hundreds of billions of dollars of more goods and China has said it will match that", he added. "What we will likely see happen in the short-term is apples that were destined for export markets will instead overhang the USA market", she said.

But Trump also raised the temperature much further by telling reporters that after the initial $50 billion of goods has been targeted with tariffs, Washington could add another $500 billion.

Local customs at the port of Qingdao have let through American products they held up on Friday, and imposed higher tariffs on the goods, according to a trader briefed by a customs official at the port. Trump has declared trade wars as "easy to win" and bet the skirmish will prompt American companies to return operations to the U.S. Heidi Heitkamp, D-N.D., highlighted further uncertainty caused by the renegotiation of the North American Free Trade Agreement and tariffs on steel and aluminum imports.

The president's tariffs, the PIIE's researchers conclude, are "a prime example of 20th century tools aimed at the knowledge-embodying trade flows of the 21st century".

Trump has said additional tariffs on hundreds of billions in Chinese goods are in the pipeline, too.

In a tweet last month, he complained about European Union trade barriers and warned that "if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!" On the other hand, it is expanding restrictions on investments.

Some Republican lawmakers lashed out at Trump, saying his trade war will hurt farmers and others.

United States tariffs on $34bn (£25.7bn) of Chinese goods have come into effect.

But reaching a deal that's palatable to both sides will be tough.

Analysts say China is unlikely to budge on those plans, which it sees as crucial for developing its huge economy.

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