China to hit back after abrupt tariff announcement
China has vowed to fight back against US President Donald Trump’s abrupt decision to slap 10 percent tariffs on the remaining US$300 billion in Chinese imports, a move that ended a month-long trade truce.
China’s new ambassador to the United Nations, Zhang Jun, said Beijing would take “necessary countermeasures” to protect its rights and described Trump’s move as “an irrational, irresponsible act.”
“China’s position is very clear that if US wishes to talk, then we will talk, if they want to fight, then we will fight,” Zhang told reporters in New York.
The US president stunned financial markets on Thursday by saying he plans to levy the additional duties starting September 1, marking a sudden end to a truce in a year-long trade tensions between the world's two biggest economies.
US stocks extended their sell-off on Friday on Trump’s tariff announcement. Yields on US and German debt plumbed multi-year lows amid a rush for safe-haven assets.
Earlier on Friday, Chinese Foreign Ministry spokeswoman Hua Chunying said China was holding firm to its position in the 13-month tariff brawl with the United States.
“We won’t accept any maximum pressure, intimidation or blackmail,” Hua told a news briefing in Beijing.
“On the major issues of principle we won’t give an inch,” she said, adding that China hoped the United States would “give up its illusions” and return to negotiations based on mutual respect and equality.
“Trump’s announcement will only serve to create additional downward pressure on business confidence,” said a group of investment strategists at Swiss investment bank UBS on Friday.
“The uncertainty created by the trade disputes has been weighing on business investment spending, which turned negative during the second quarter,” they noted in a research report. “If businesses stop hiring, this would greatly increase the risk of a recession.”
The new tariffs would cause most businesses to “worry about the possibility of that (tariff) rate rising again in the future,” although they should be able to survive this time, the UBS report said.
The report also said US consumers could be another major hit, which would put a damper on the country’s economic growth. If implemented, these proposed tariffs would be translated into an approximately US$30 billion tax on US consumers, or 0.15 percent of US GDP, according to the UBS report.
Although some tariffs would be absorbed by corporate profit margins, retailers “will look to ‘share’ this tax with consumers, attempting to increase prices,” a Bank of America Merrill Lynch Global Research report said.
“Consumer confidence presumably would be hit. And we will see if consumers actually change their spending behavior. If consumers cut back, we are in for a much more difficult path for growth,” it stressed.