Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

The White House has announced a 25-percent tariff on $50 billion worth of Chinese goods in what it calls a clampdown on unfair trade practices by Beijing. "China does not want a trade war", the statement continues by promising to "fight back vigorously" in defense of globalization and the world trade system.

Fearing that China would turn threats into reality by imposing tariffs on US agricultural goods, soybean futures settling in July also fell 1% to a near one-year low of $9.17 Friday.

In Beijing on Friday, Chinese foreign ministry spokesman Geng Shuang repeated earlier warnings that all trade talks between China and the United States would be void if Washington imposed trade sanctions. The Washington Post and The Wall Street Journal were among the publications reporting overnight that Trump, fresh from his return from the Singapore Summit with North Korean leader Kim Jong Un, has made a decision to enact significant tariffs on Chinese goods.

The Trump administration's China tariffs spared some finished goods like smartphones and washing machines, while charges on parts and components could drive up costs in the US supply chain. The tariffs are part of the United States response to China's policies and practices that require foreign companies to hand over trade secrets involving technology, intellectual property and innovation, the USA government said.

From July 6, additional tariffs will be levied on some US$34 billion worth of Chinese products. During an impromptu appearance on the White House North Law, the president hailed his "very big tariffs" on China.

"In this day and age, launching a trade war is not in the interest of the world", China's Commerce Ministry said.

Meantime, The Office of the United States Trade Representative (USTR) published a list of 1,102 Chinese imports that will be subject to additional duties. It also added, "China is a powerful guardian and has enough ammunition to defend existing trade rules and fairness".

In March, the Trump administration imposed tariffs on imports of steel and aluminum from Russia, China, and India.

The announcement caps months of sometimes fraught shuttle diplomacy between Washington and Beijing, in which Chinese offers to purchase more US goods failed to assuage Trump's grievances over the soaring US-China trade imbalance and Beijing's industrial development policies.

That raises the specter of an intensifying trade war, which would hurt consumers, companies and the global economy.

Beijing also has announced plans to cut import duties on autos and some consumer goods and to ease limits on foreign ownership in auto manufacturing, insurance and some other industries, though those don't directly address us complaints.

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