WASHINGTON — President Donald Trump just imposed tariffs on hundreds of Chinese products — from X-ray tubes to incinerators. And Beijing is striking back by targeting U.S. soybeans, beef, seafood and other products. The punch-and-counterpunch announced Friday in Washington and Beijing moved the world's two largest economies perilously near a trade war that would inflate prices for consumers, disrupt the flow of goods and perhaps slow a global economy that has been enjoying its healthiest expansion in a decade. "Everybody loses in a trade war," says Philip Levy, senior fellow at the Chicago Council on Global Affairs and a former White House economic adviser. "You get consumers who are worse off. You get producers who are worse off, farmers who are worse off and you don't even achieve your goal." What's more, the China tariffs come just as the United States is sparring with close allies like the European Union, Canada and Mexico in a separate conflict over trade in steel and aluminum. The White House on Friday announced plans to slap 25 percent tariffs on more than 1,100 Chinese products, worth $50 billion a year in imports. The administration had originally proposed the tariffs in April, starting with a list of 1,333 Chinese products lines. After receiving public feedback, it removed 515 from the blacklist and added 284 others. Starting July 6, the U.S. will tax the 818 products, worth $34 billion a year in imports, that remained from the original list. It won't target the 284 additions, worth $16 billion, until after it collects public feedback. Beijing immediately said it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 U.S. exports, including farm products, autos and seafood. "The Chinese side doesn't want to fight a trade war, but facing the shortsightedness of the U.S. side, China has to fight back strongly," the Chinese Commerce Ministry said in a statement. "We will immediately introduce the same scale and equal taxation measures, and all economic and trade achievements reached by the two sides will be invalidated." American soybean farmers, who send about 60 percent of their exports to China, are especially worried about Beijing's retaliation. Soybean prices were already falling before Friday's announcement. Prices will likely drop further should the tariffs be imposed," says Bill Shipley, president of the Iowa Soybean Association. "This will further pressure agricultural families and businesses already struggling with below break-even commodity prices." Tariffs are a tax. So they drive up the price of targeted imports. The reduced foreign competition means that domestic producers can raise their prices, too. The Trump administration has sought to protect consumers from a direct impact from the tariffs. The tariffs target mainly Chinese industrial machinery, aerospace parts and communications technology; they spare such consumer goods as smartphones, toys and clothes that Americans purchase by the truckload from China. Televisions and pharmaceuticals were removed from the original tariff list. Still, these tariffs will impose higher costs on U.S. companies that use the equipment. And over time, those costs could trickle down to consumers. The impact won't be as visible as it would be if consumer products were taxed directly. At the heart of the dispute, the United States accuses China of using predatory tactics in a breakneck effort to supplant American technological supremacy. Among these are outright cyber-theft. Beijing forces U.S. and other foreign companies to hand over technology as a price of admission to the vast Chinese market. And it uses Chinese government money to outbid private companies for U.S. technology at above-market prices. U.S. officials say they fear that Beijing's long-range development strategy, dubbed "Made in China 2025," will hamper competition and hurt American competitors. It calls for creating Chinese global competitors in such areas as information technology, robotics, aerospace equipment, maritime engineering equipment, electric vehicles, biopharmaceuticals and medical devices. Foreign business groups have complained for a decade that Beijing is squeezing them out of promising economic fields. They say "Made in China 2025" appears to leave them little or no place in those industries. But it isn't always clear whether the United States is seeking to curb China's sharp-elbowed practices or to keep it from emerging as a legitimate rival. Yet, the two nations have tried to work things out. For a time last month it looked as if they'd reached a truce. After a meeting in Washington, Treasury Secretary Steven Mnuchin declared the trade war "on hold" and the tariffs suspended. Mnuchin said so after China pledged to buy more from the U.S., especially energy and agricultural products and to shrink America's gaping trade gap with China — $336 billion last year. But critics dismissed that agreement as vague. And Trump backed away and returned to the tariff threat. Erin Ennis of the U.S.-China Business Council says she suspects Beijing will wait to see whether the United States actually puts the U.S. tariffs into effect July 6 before it starts taxing U.S. goods. That could buy time for last-ditch negotiations. The announcement came as Trump just enraged the EU, Canada and Mexico by imposing tariffs on imported steel and aluminum. Worse, he argued that the imported metals posed a threat to U.S. national security — an insult to the longstanding American allies that they roundly rejected. He has also threatened to tax auto imports, also on national security grounds. Critics say Trump's decision to pick fights with America's friends weakens his hand against China. Trade analysts say it would be wiser for the United States to enlist its allies to challenge China's drive to grab technology, rather than go it alone with unilateral tariffs. After all, companies from the advanced economies of the U.S., Europe and Japan share the same gripes. China is adept at playing countries and companies off against one another, Jennifer Hillman, a Georgetown University law professor, testified last week before the U.S.-China Economic and Security Commission. If one complains, China can lock it out of the market and do business with a more compliant competitor. Better to present a united front.<doc-sep>Adam Shell, USA TODAY Tariffs could morph into a potential threat to Americans' finances that goes beyond paying a little extra for a steak, a TV or other everyday items that are expected to rise in price due to the escalating dispute between the U.S. and its trading partners. The U.S. decision Friday to move ahead with tariffs on $50 billion of Chinese goods could potentially put workers' investment portfolios and jobs in jeopardy if the trade tiff intensifies and a global trade war breaks out, Wall Street analysts and economists say. The big risk is if President Donald Trump's first strike in the tariff conflict is followed by counterstrikes by Beijing and others, such as Canada and the European Union, causing the disagreement to spin out of control and undermine investor and CEO confidence in the economy and markets. "It's the indirect effect on confidence that matters," says Michael Gapen, chief U.S. economist at the New York offices of Barclays, a British bank. There's a lot more at stake for consumers than price inflation at the cash register, Gapen says. It is far worse for them financially if the trade fight causes the economy to slow, businesses to stop hiring or start firing, and markets to suffer a sizable tumble that sets their retirement accounts back in a meaningful way. The trade spat could undo much of the economic good set in motion in December by the tax cuts. Stocks initially swooned on the news Friday, with the Dow Jones industrial average falling as much as 281 points before paring some of its losses to close down 84 points for the day at 25,090. More:McDonald's to test plastic-straw alternatives in U.S. later this year More:World Cup is great for soccer fans but history shows your 401(k) may suffer during games More:Multi-state salmonella outbreak linked to Kellogg's Honey Smacks cereal, CDC says For now, markets are waiting and watching to see how the high-stakes negotiations play out. "One of the most significant worries for the U.S. economy and markets is the possibility of a prolonged volley of threats and retaliation," says Quincy Krosby, chief market strategist at Prudential Financial. Tiny tariffs The current dollar amount of U.S. tariffs slapped on Chinese goods are tiny when compared to the size of the $18 trillion U.S. economy. The $50 billion in tariffs targeting Beijing will result in an estimated hit to annual U.S. economic growth of just a tenth of percentage point "at most" and a rise of a similar amount to overall consumer prices, Barclays data show. The total amount of imported goods bought by Americans represents just a sliver of their overall purchases. Imported purchases, Gapen notes, only account for about 6% of the consumer price index, which measures prices Americans pay for a basket of everyday goods, such as groceries, gas and medicine. And with the U.S. jobless rate at an 18-year low of 3.8%, "it's tough to see (tariffs) having a major impact on the consumer" unless consumer confidence, which is at its highest level since 2000, falls a lot, says Don Rissmiller, an economist at Strategas Research Partners in New York. In an effort to shield American consumers from the tariffs, the list of Chinese products the Trump administration targeted in the first phase of its tariffs focused mostly on "industrially significant technologies." The initial list, which goes into effect July 6, covers about $34 billion of Chinese goods. The second phase, which is still under review by the U.S., would impose an additional $16 billion of levies, according to the Office of the U.S. Trade Representative. Passed onto consumers The tariff list reads more like a supply-parts booklet. It includes things like watertube boilers, printed circuit assemblies for ATM machines, boat propellers, steam turbines, can-sealing machines, TV tuners, flight data recorders, and aircraft launching gear. Consumer-focused stuff was less prominent, but included motorcycles and mopeds, as well as LEDs for backlighting of LCD TVs. But even tariffs on imported industrial products used to make finished consumer goods in the U.S. will likely result in higher prices -- a tax of sorts -- that will be passed on to consumers, says Chris Rupkey, chief financial economist at MUFG, a Tokyo-based global bank with offices in New York. "Production costs will go up here," Rupkey says. "Consumers are going to lose and pay a higher price no matter if the goods are consumer-based or industrial supply-chain products." And higher prices means consumer spending is likely to dip. "Consumers will end up buying less," says Scott Anderson, chief economist at Bank of the West in San Francisco. The danger of the dollar amount of tariffs imposed by the U.S. on its trading partners rising sharply, and vice versa, is another risk. Says Rupkey: "That $50 billion could go higher very quickly." Wall Street is still hoping that the tit-for-tat trade skirmish is just a negotiating tactic of Trump that will end with the U.S. receiving better trade terms. "I view all of this as hardball negotiations," says Alan Skrainka, chief investment officer at Cornerstone Wealth Management in Des Peres, Missouri.<doc-sep>China responded vigorously in state media on Saturday after the administration of U.S. President Donald Trump said it would impose tariffs on $50 billion of Chinese imports, but some commentary left room for further negotiations. Late on Friday, China said it would impose additional 25 percent tariffs on 659 U.S. goods worth $50 billion, in response to the U.S. imposition of tariffs. "The wise man builds bridges, the fool builds walls," the official Xinhua news agency said in an editorial, echoing official comments that China would defend its interests in a trade war. "Following the path of expanding and opening up is China's best response to the trade dispute between China and the United States, and is also the responsibility that major countries should have to the world," it added. An editorial in the ruling Communist Party's official People's Daily condemned what it called the Trump administration's "obsession with playing the disgraceful role of global economic disruptor". It added, "There is no winner in a trade war, and the U.S. instigation of a trade war is extremely destructive to global trade, economic globalization, multilateral trade systems and global production supply chains.<doc-sep>
Barely 24 hours after the U.S. hit China with new tariffs on imports, Beijing fired a return salvo Saturday in a growing trade dispute with President Donald Trump by imposing duties on a $34 billion list of U.S. goods ranging from soybeans to whiskey to cigars. Beginning July 6, China will slap an extra 25 percent tariff on 545 products from the United States including soybeans, electric cars, orange juice, whiskey, salmon and cigars, according to the Ministry of Finance. China said additional tariffs on 114 more U.S. items, covering chemical products, medical equipment and energy, will be announced later. “The Chinese side doesn’t want to fight a trade war, but facing the shortsightedness of the U.S. side, China has to fight back strongly,” the Ministry of Commerce said in a statement. The ministry also said it was scrapping an earlier deal to buy more American farms goods, natural gas and other products that had been aimed at narrowing Beijing’s multibillion-dollar trade surplus with the United States. The statement said the U.S. step on Friday violated "the relevant rules of the World Trade Organization" and went against a consensus reached in bilateral economic and trade agreements. Such a move, it said, "seriously infringes upon the legitimate rights and interests of the Chinese side and undermines the interests of China and its people." "The Chinese side firmly opposes that," the statement said, according to the official Xinhua news agency. The U.S. move on 25 percent tariffs, which covered an array of Chinese-made goods from jet engines to dishwasher parts, sent markets plunging on fears of a trade war. The Chinese announcement is the latest volley in a trade dispute between China and the U.S. that has been escalating for months. In April, China raised import duties on a $3 billion list of U.S. products that include pork and apples. Chinese officials have threatened further retaliation, sparking fears of a trade war between the two countries. In May, tensions eased temporarily after Chinese negotiators agreed to buy more American farm goods, natural gas and other products. American officials said they would suspend threatened tariff increases on up to $150 billion of Chinese goods. But the dispute flared up after the White House renewed its plan for a tariff hike on $50 billion of Chinese goods as part of a technology dispute. The Chinese government had warned after another round of talks June 3 that it would scrap the farm purchase deals if new tariffs went ahead. Washington, along with Europe, Japan and other trading partners, have complained that Beijing’s economic gamesmanship includes outright theft of foreign technology and subsidies and protection from competition for fledgling Chinese industries. They say those violate Chinese market-opening commitments under the World Trade Organization (WTO). Citing what he described as unfair trading practices and China’s “theft of intellectual property,” Trump threatened on Friday to take tougher measure if Beijing retaliated with trade barriers of its own. “This situation is no longer sustainable,” Trump said. “The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.” Trump officials said the products to be hit with tariffs include those that benefit from the “Made in China 2025” policy, an effort by Beijing to ramp up aerospace, robotics and other manufacturing industries. Officials said the list of products does not include common consumer products, such as cell phones and TVs. In all, 818 products representing $34 billion in U.S. imports will fall under the new tariffs — less than the roughly 1,300 products the administration had initially considered. Administration officials said an additional 284 products are under review. The current dollar amount of U.S. tariffs imposed on Chinese goods are tiny, however, when compared to the size of the $18 trillion U.S. economy. The $50 billion in tariffs will likely mean just a tenth of a percentage point hit "at most" on annual U.S. economic growth and a similar jump in overall consumer prices, according to data from Barclays, the British bank. U.S. Trade Representative Robert Lighthizer described the tariffs Friday as a “defensive” action. “China’s government is aggressively working to undermine America’s high-tech industries and our economic leadership through unfair trade practices and industrial policies,” Lighthizer said. Businesspeople and economists say Chinese leaders are less likely to compromise on the technology dispute.