US-China trade dispute escalates

After the United States unveiled plans to impose tariffs on US$50 billion in Chinese imports Tuesday, China lashed back within hours, matching the American tariffs with plans to tax US$50 billion of US products, including soybeans and small aircraft.

The tariffs wouldn't kick in right away. The US government is inviting public comment on its trade sanctions through May 11 and will hold a hearing on the plan May 15. And China set no date for its 25 per cent duties to take effect, saying it is waiting to see what President Donald Trump does.

Beijing's list of 106 products included the biggest US exports to China, reflecting its intense sensitivity to the dispute over American complaints that it pressures foreign companies to hand over technology. The list included soybeans, American beef, whisky, passenger vehicles, industrial chemicals, and aircraft up to 45 tons in weight. That excludes high-end Boeing Company jetliners such as the 747 and 777, leaving Beijing high-profile targets for possible future conflicts.

A list the US issued Tuesday of products subject to tariff hikes included aerospace, telecoms and machinery, striking at high-tech industries seen by China's leaders as the key to its economic future.

China said it would immediately challenge the US move in the World Trade Organization. A deputy finance minister, Zhu Guangyao, appealed to Washington to "work in a constructive manner" and avoid hurting both countries but warned against expecting Beijing to back down.

Companies and economists have expressed concern that global economic activity might sputter if other governments are prompted to raise their own import barriers.

US Commerce Secretary Wilbur Ross brushed off concern about a trade war. In an interview with CNBC on Wednesday morning, Ross said the tariffs announced by China amount to a mere 0.3 per cent of America's gross domestic product.

He added that some US punitive action against Beijing has been 'coming for a while 'over what the United States calls China's predatory behaviour involving technology.

"What we're talking about on both sides is a fraction of 1 per cent of both economies," Ross said.

The larger concern, the commerce secretary said, is the protection of US intellectual property.

Asked whether the US tariffs against China were a negotiating ploy, Lawrence Kudlow, Trump's top economic adviser, said: "Potentially. It's part of the process.

I would take the president seriously on this tariff issue. There are carrots and sticks in life ... Both sides benefit by positive solutions that lower barriers."

To minimise the cost to China, regulators picked products for which replacements are available, such as soybeans from Australia or Brazil, said Tu Xinquan, director of WTO studies at the University of International Business and Economics in Beijing.

Separately, Beijing raised tariffs Monday on a US$3 billion list of US goods including pork, apples and steel pipe in response to increased US duties on imports of steel and aluminium that took effect March 23.