USA tariffs take effect, China announces retaliation

China EU USA trade war alliance Donald Trump President Xi

China EU USA trade war alliance Donald Trump President Xi

Trump and his advisers argue the tariffs are necessary to pressure China into abandoning unfair practices such as stealing intellectual property and forcing American companies to hand over valuable technology. American officials worry Chinese plans to create tech champions in fields including robotics, biotech and artificial intelligence will erode USA industrial leadership.

At the stroke of midnight Washington time, the U.S. pulled the trigger on 25-per cent duties on about $34 billion in Chinese machinery, electronics and high-tech equipment, including autos, computer hard drives and LEDs.

So far, the Chinese goods the U.S. has chosen to levy additional tariffs on are capital and intermediate goods, rather than consumer goods.

The Chinese Foreign Ministry said "retaliatory tariffs" also took effect, but provided no other details.

China's commerce ministry accused the United States of launching the "largest trade war in economic history-".

"There are no winners in a trade war", said William Zarit, chairman of the American Chamber of Commerce in China.

"This kind of tariff is a typical trade bullying", the statement said, "which is seriously jeopardizing the global industrial chain and value chain security, hindering the pace of global economic recovery, triggering global market turmoil, and will affect more innocent multinational corporations, general enterprises and ordinary countries".

Japan's main stock index, the Nikkei 225, gained 1.1 percent, while the Shanghai Composite Index added 0.5 percent and Hong Kong's Hang Seng rose 0.8 percent.

These initial tariffs are unlikely to inflict serious harm to the world's two biggest economies.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union. This prompted Beijing to respond in kind with levy tariffs on 545 items of USA imports, including agricultural products, vehicles and aquatic goods - also worth $34 billion, state-run newspaper The China Daily reported Friday.

China has said it would respond with tariffs on hundreds of US goods, including top exports such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 US election, such as Texas and Iowa.

Two companies in Shanghai told the BBC that customs authorities were delaying clearance processes for U.S. imports on Friday.

Beijing has vowed to respond immediately with an equal amount of tariffs of its own against U.S. autos, agricultural and other products.

Carmaker BMW said it could not absorb all of the 25% tariff on the cars it exports to China from a plant in Spartanburg, South Carolina and would have to raise prices.

"This is a potential concern for the outlook of corporate investment and consumption around world", Hui said.

The government-run English language China Daily newspaper said: "The Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China". "But it is applying the brakes to a global economy that has less durable momentum than appears to be the case", Rob Carnell, chief economist at ING, said in a note to clients.

Canatella says he hopes the tariffs are resolved before harvest season starts in October. Coupled with China's vow to retaliate, it has fueled fears the conflict could weigh on global economic growth.

China should "step up efforts from both the supply and demand side and actively cultivate niche markets within the key consumer sectors", the meeting said, according to the broadcaster.

"I think it's true to say that a lot of the pessimism has already been factored in over the past couple of weeks, with share prices gradually going down as the realisation has set in that apart from being a war of words, this does now seem to be a trade war", he added.

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