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China hits US with reciprocal tariffs as media attacks 'fool' Trump

By Caoimhe Toman

Date: Monday 18 Jun 2018

China hits US with reciprocal tariffs as media attacks 'fool' Trump

(Sharecast News) - China has retaliated and hit US with $34bn tariffs on over 600 products including whiskey, electrical cars and soy, while state media attacked the US president Donald Trump's actions.
After the White House announced on Friday that it would impose 25% tariffs on Chinese products worth $34bn, with another $16bn targeted at a later date, Beijing answered with sanctions that state media called "responsive, passive and reciprocal".

The US was initially planning on hitting China with tariffs worth $50bn but the list of items was reduced, although the remaining $16bn are to undergo further review in July before being added to the tariff list.

Chinese state media also attacked the US president over the weekend for escalating the possibility of a trade war.

State-run tabloid Global Times said: "The unpredictability of the Trump administration has become mundane, or even boring for China.

"It reinforces the difference in images of the two countries: one challenges the foundation of global trade through sudden attacks; and one that is prepared to defend itself in a trade war that it cannot avoid."

China's official Xinhua news agency added: "The wise man builds bridges, the fool builds walls. With economic globalisation there are no secluded and isolated islands."

It maintained that China "does not want the trade war", but in the face of a "capricious" Washington, "has no choice but to fight back vigorously in defense of its national interests, the trend of globalization and the world's multilateral trading system".

Analysts believe that trade tensions could still escalate further as the US was looking at an additional $100bn worth of tariffs on Chinese products.

Rebecca O'Keeffe, head of investment at Interactive Investor, said Trump's aggressive negotiating style is not a bluff and his latest tariffs on Chinese products come with pronounced risks for global economy: "The real danger is that the Chinese retaliation may start a chain reaction that is difficult to stop - especially as Trump likes to have the last word.

"The current position on tariffs is unlikely to cause a full-blown rout for markets, but the prospect of further escalation and reprisals could cause considerable damage to the global economy, increasing the risks and anxiety," she added.

Jasper Lawler, analyst at London Capital Group said on Monday: "The tit for tat response is putting the two powers a step closer to an all-out global trade war. Investors will now be watching carefully for Trump's response with further measures expected. The overriding concern here is how this is going to escalate with potential fallout being a slowdown in world trade and a drop-in business sentiment."

European equity markets were all lower on Monday, with Asia mostly swathed in red too.

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