Donald Trump has announced at least $50 billion of tariffs on China to punish the country for forcefully acquiring US intellectual property, triggering fears of a new trade war.
Some 1,300 products are expected to be impacted, with some time given for appeals before the tariffs come into effect.
Mr Trump also ordered the US Treasury to work up investment restrictions on China, while a case in the World Trade Organisation [WTO] will also be pursued.
While China last night began laying out reciprocal tariffs, Britain was breathing a sigh of relief after the EU was given an initial exemption on steel tariffs.
REUTERS
The action was taken after the Trump administration concluded that China’s attempts to acquire American technology had “unreasonably burdened US commerce”.
The White House is infuriated that China strong-arms US companies into handing over valuable technology in turn for access to its markets.
Senior White House officials claimed the move would have “minimal” blowback on US customers and that Mr Trump was “standing up for US corporations”.
One said: “Bottom line here, what the United States is doing is simply strategically defending itself against this particular form of economic aggression."
Mr Trump said the move would make America a “much stronger, much richer nation” as he unveiled the announcement in the White House. He also suggested the value of the tariffs could ultimately rise to $60 billion.
AFP
However there are fears the move could trigger a trade war between the world’s two biggest economies after China threatened to retaliate.
The Dow Jones had dropped more than 500 points at one moment yesterday as stock markets reacted to the developments.
The move is more significant financially than the US steel and aluminum tariffs announced earlier this year, affecting trade worth much more.
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In a briefing call with journalists, senior White House officials claimed China’s vast trade surplus with America effectively robbed the US of around two million jobs.
A senior White House official said: “This is a historic event and President Trump should be applauded for his courage and vision on this.”
He predicted “widespread support” for the move from US congressmen, businesses and labour representatives.
Before the announcement, the Chinese government said that it “will not hide” from a potential trade war with the US.
On Tuesday, Chinese Premier Li Keqiang said that he hoped that a trade war would be avoided and called for “calm”.
AFP
Hua Chunying, spokesperson for China’s Ministry of Foreign Affairs, said: "The Chinese side never wants to fight a trade war with anybody, but if we are forced to, we will not hide from it.” She added that China would “definitely take firm and necessary countermeasures to defend its legal rights."
Following Miss Hua’s comments Chinese newspaper The Global Times, a government-controlled tabloid, said that the country had launched a “multi-faceted effort” to prepare for an “imminent trade war”.
On Wednesday, China also accused the United States of "repeatedly abusing" trade practices after the World Trade Organization ruled that Washington had not fully complied with a 2014 ruling against its anti-subsidy tariffs on various Chinese products ranging from solar panels and wind towers to steel cylinders and aluminium extrusions.
"It’s really important for them to lay that out so that we have a strategy going forward and it’s not just tariffs for tariffs’ sake."
Parker said China needs to adopt a tougher deterrent against counterfeiting and IP theft, and do away with joint venture and business licensing requirements that can be used to mandate technology transfers to gain market access.
"At the moment, it’s very difficult for the two sides to sit down and talk because the Trump administration seems determined to go this way regardless of China’s manoeuvres," said He Weiwen, a senior fellow at the Center for China and Globalization (CCG), a Beijing-based think tank.
In a possible sign of what is to come, Best Buy Co Inc , the largest US consumer electronics retailer, has decided to stop buying smartphones from Chinese telecom equipment maker Huawei, a source familiar with the matter told Reuters.
Analysts said US companies like Boeing Co, which sell billions of dollars worth of planes to Chinese airlines, as well as deals which require Chinese approval could also become caught in the cross fire should a trade war break out.