As Trump Threatens $200 Billion in New Tariffs, China Rattles Saber

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As the Trump administration threatened tariffs of $200 billion on China imports, the People’s Republic was quick to react. The Chinese government said it would “strike back,” presumably with tens of billions of dollars of tariffs of its own.

The battle already has taken a toll beyond a drop in business confidence in the United States and anxiety about gross domestic product and the stock markets. One reason for China to act quickly to bring U.S. trade negotiators to the table is the damage to its own stock markets. While U.S. markets have taken only the most modest of dips, China’s markets have sold off quickly. Today, the Shanghai Composite is down 3.8% and the Hang Seng by 2.8%.

In an official comment that appeared in China’s official medium, Xinhua, officials said:

A spokesperson of China’s Ministry of Commerce (MOC) said Tuesday that if the United States loses its rationality and unveils another list of Chinese products for additional tariffs, China will have no choice but to take comprehensive measures combining quantitative and qualitative ones to resolutely strike back.

After unveiling plans to impose additional tariffs on Chinese goods worth around 50 billion U.S. dollars, the United States went even further by threatening to identify 200 billion U.S. dollars worth of Chinese products for additional tariffs.

China was not specific about the tariffs, but likely it will be as a means to raise alarm in the United States. Several American industries have already told the Trump administration how badly a trade war would harm their businesses.

Both countries still have time to pull back their threats. China may have to make some concessions to convince U.S. officials that its stance on trade is more balanced than American officials believe it has been in the past. For the time being, however, the threats come every few hours, the effects of which are approaching the actual start of a trade war.