Published: Fri, June 22, 2018
Money | By Hannah Jacobs

China Trade Dispute Worries Investors

China Trade Dispute Worries Investors

On Friday, the U.S. made a decision to impose 25% tariffs on $50bn of Chinese products. The first round is to take effect on July 6.

China has threatened "qualitative" as well as "quantitative" moves if the dispute worsens, meaning it could use inspections of goods, visa applications and other regulatory measures to make life more hard for U.S. companies doing business in China.

China says it will take appropriate countermeasures if the United States follows through with additional tariffs on Chinese goods.

To respond to Trump's threat to impose tariffs on as much as $250 billion worth of Chinese goods, Beijing would have to find other ways to respond. That's 90 percent of everything China exports to the USA, from electronics, clothing, toys, tools, you name it. China protects its companies in many sectors, especially high-tech.

Despite the promise by the U.S.to leave assembled iPhone units alone, Apple is concerned that the Chinese could retaliate against the US company.

So, doesn't the administration have a point?


US business groups said members were bracing for a backlash from the Chinese government that would affect all American firms in China, not just in sectors facing tariffs.

"The United States has initiated a trade war that violates market laws and is not in accordance with current global development trends", it added.

American corporate giants that rely on huge revenues from business in China, such as Boeing, Caterpillar, Intel and 3M, are among the biggest losers on the Dow.

"We can no longer be the stupid country", Trump said.

"This is unacceptable. Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States". China's trade surplus with the USA past year was about $375 billion.

U.S. officials will hold a press conference on the decision to impose further tariffs on China this morning. The sources say that China could play the "national security" card to prevent Apple's contract manufacturers like Foxconn from receiving the constant flow of parts needed to keep iPhone assembly lines running smoothly.


On April 3, the White House released a list of 1,300 Chinese products worth $50 billion that could be hit with potential tariffs.

The Australian dollar sank to a one-year low of A$ 0.7391 as the U.S.

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology", Trump said in a statement Monday announcing the new action.

About $50 billion in tariffs are being targeted as an attempt to get Chinese officials to address intellectual property theft of United States companies by Chinese companies.

However, business expert Derek Scissors of the American Enterprise Institute says the USA could gain from the dispute.


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