China's government has criticized the latest U.S. threat of a tariff hike as "totally unacceptable" and vowed to retaliate in their escalating trade war. This has raised concerns that China could retaliate with non-tariff trade measures.
Beijing has said it would hit back against Washington's escalating tariff measures, including through "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.
It stems from Washington's belief that Beijing steals or pressures companies to hand over technology and worries that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.
The planned new tariffs follow the 25 percent imposed on $34 billion in Chinese products, which Beijing responded to by hitting the same amount of US imports. That came four days after Washington added 25 per cent duties on US$34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports.
The abrupt escalation is "totally unacceptable", said a Commerce Ministry statement.
'To protect the core interests of the nation and its people, the Chinese government will be forced to impose necessary countermeasures'.
That means that U.S. companies working inside of China may be about to feel the wrath of the Chinese government - and consumer.
China Daily said in an editorial that Beijing had to stand up to Washington.
President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or almost all of China's annual exports to the United States.
A senior White House official told CNBC that the reason for the $200 billion figure was that it's "roughly equal to their exports to us". The threat to the USA economy is less about a question of "if" and more about "when" and 'how bad.' Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise.
The new list includes vacuum cleaners, furniture, auto and bicycle parts, French doors and plywood.
That "will hit the Chinese export sector hard", said Rajiv Biswas of IHS Markit in a report.
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'Given China's likelihood of retaliation, it's also billions worth of new tariffs on American exporters'.
The $200 billion far exceeds the total value of goods China imports from the United States, which means Beijing may need to think of creative ways to respond to such US measures.
China bought US$130 billion of USA goods a year ago.
The latest round of proposed tariffs come a few days after the USA government unveiled procedures for companies to apply for exclusions from the first round of tariffs, which went into effect July 6. That would leave China only US$80 billion for further retaliation.
Instead, its heavily regulated economy gives Beijing tools to disrupt operations for American automakers, restaurant chains and other companies that are looking to China to drive revenue growth.
Regulators can deny or cancel licenses or tie up companies by launching tax, environmental or anti-monopoly investigations.
Companies are watching United States chipmaker Qualcomm Inc., which has waited months for Chinese regulators to decide whether to allow its proposed US$44 billion acquisition of NXP Semiconductors.
The economic impact of the conflict already is spreading.
Members of Congress are increasingly questioning Trump's tactics.
President Donald Trump has threatened to tax as much as $550 billion in Chinese products - an amount that exceeds America's total imports from China past year.
Investors had been taking the trade war in stride but Tuesday's announcement appeared to dent that optimism.
In financial markets, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 per cent, while the main indexes in Hong Kong and Shanghai fell more than 2 per cent.