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China vows retaliation for latest United States tariff threat

China vows retaliation for latest United States tariff threat

Among the potential ways Beijing could hit back are "qualitative measures", a threat that US businesses in China fear could mean anything from stepped-up inspections to delays in investment approvals and even consumer boycotts.

"China's economy is much less dependent on trade now and on trade with the US than it used to be", says Linda Lim, professor of corporate strategy and global business at the University of MI.

"There certainly is going to be pronounced risks mainly because we have now moved on to the tit-for-tat-for-tit phase of it", said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. Beijing also has filed a complaint in the World Trade Organization against the United States actions.

China has yet to say how it will respond after the fresh round of US tariffs would bring to $250 billion the total of Chinese goods impacted, once the latest list of duties take effect after a two-month comment period.

More than 6,000 items could be affected - including burglar alarms, auto tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products.

"For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition".

Oliver Jones from Capital Economics has warned that China's response to Trump's latest tariff threat could hit the U.S. stock market hard. "This is totally unacceptable", the statement said.

China imported USA goods worth $130 billion previous year and Friday's tariff hike hit $34 billion of that, with another $16 billion cited for a possible increase.

In fact, a trade war would only accelerate a process already under way in China of becoming more self-sufficient economically, Lim says.

Also pressuring the market Wednesday, the S&P 500 energy index fell 2.2 percent, leading sector declines.

On Wall Street, futures for the Dow Jones industrial average and Standard & Poor's 500 index were up 0.4 percent.

The onshore yuan tracked its offshore counterpart lower with traders closely watching the key 6.7 per dollar level as pressure mounted on the currency.

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President Donald Trump has said he may ultimately impose tariffs on more than $500 billion worth of Chinese goods - roughly the total amount of USA imports from China previous year.

- Canada and Mexico - Canada and Mexico, members of the North American Free Trade Agreement (NAFTA) with the USA, have not been spared the Washington offensive on steel and aluminum and have imposed their own counter-tariffs on United States goods.

The tariffs will not be imposed until after a two-month period of public comment on the proposed list.

Some US business groups and senior lawmakers were quick to criticise the move.

Senate finance committee chairman Orrin Hatch also expressed alarm.

Trump has been receiving support for regulation of US businesses as well as domestic tax cuts from the US Chamber of Commerce but soon after Tuesday's announcement a Chamber spokeswoman states, "Tariffs are taxes, plain and simple".

"I love what the president has done in most cases, but the tariff is basically a tax on people who use aluminum", Pete Coors told CNN.

Trump has said the European Union is "possibly nearly as bad as China" when it comes to trade, as a raft of retaliatory tariffs from Brussels came into effect on June 22.

But the USA action drew a swift reaction from the plastics and petrochemical industries, with the head of the Plastics Industry Association saying the tariffs would "boomerang" and hurt manufacturing.

U.S. Trade Representative Robert Lighthizer said Washington did a thorough investigation to justify imposing tariffs on $50 billion worth of imports to compensate for the harm to the U.S. economy caused by China's unfair trading practices, including theft or forced transfer of American technology.

Research from Capital Economics (CE) shows sales from US-owned affiliates total $US350 billion - similar in size to the United States trade deficit.

The Commerce Ministry also called upon the global community to "work together to safeguard the rules of free trade and the multilateral trading system and jointly oppose trade hegemonism".