China threatens USA with tariffs, says 'not afraid of trade war'

China threatens USA with tariffs, says 'not afraid of trade war'

Analysts said traders were also spooked also by the fact China is the biggest buyer of USA government bonds, which the USA needs to keep its economic wheels greased. China claimed that the slides back its stance.

But other factors like valuations, the Facebook-led weakness in tech, signs of slowing economic growth, lingering nervousness following the burst of market volatility last month and tighter USA monetary policy are all at play. That would be a huge blow to US farmers, as American exports to the Asian country are worth about $14 billion annually. "China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a risky place".

Earlier this month the Trump administration ordered tariffs on imported steel and aluminum, and stocks dropped as investors anxious about the possibility of tougher restrictions on global trade and smaller profits for corporations.

That will nearly certainly spell a further escalation of tensions.

Carnell said in an analysis published Thursday, "If the [U.S.] tariffs go ahead as planned, then we believe China will retaliate". It is impossible to imagine that they can not.

However, Chinese authorities retaliated against increase in tariffs by targeting the USA agricultural products that rely heavily on the Chinese export market. "This can turn ugly on a global scale very quickly".

Hours after Trump announced the proposed import duties - which are expected to cover sectors such as robotics, hi-tech trains and aerospace - China said it had prepared retaliatory tariffs on about $3bn worth of U.S. imports.

Meanwhile, Beijing has responded by listing 128 USA imports- including fruit, wine, and steel pipes, that it would place tariffs on worth up to $3 billion.

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US Commerce Secretary Wilbur Ross on Thursday suggested the new measures on intellectual property were a way of bringing Beijing to the table, telling CNBC they were "the prelude to a set of negotiations".

Arthur Kroeber, managing director of Gavekal Dragonomics, said Beijing was sending a "carefully calibrated" message that it will stand up to Trump, while trying not to escalate the spat into a confrontation that could seriously threaten the global trading system.

Peter Donisanu, an investment strategy analyst for the Wells Fargo Investment Institute, said the risk of a damaging trade war is still low because the Trump administration is targeting specific goods that are not central to China's economy.

Mr Trump, however, has said that the U.S. move to raise tariffs against China was already beginning to get results.

Deutsche Bank provided an example of how uncertainty caused by the Trump administration measures could cause chain reactions that would affect other industries.

That is because millions of tonnes of cheap Chinese steel would still be on the market even if trade tariffs did make it unviable in the US.

WH Group, the world's largest producer of pork after the takeover of Smithfields Foods by China's Shuanhui global in 2013, was among the worst performers on Hong Kong's Hang Seng index, falling up to 10 percent following the news of the intended tariffs. "Any trade war will only lead to a lose-lose situation". Roughly $1 of every $5 in Apple's sales came from China, Hong Kong and Taiwan in its a year ago.

Trade war fears have had little impact, if any, on major currency, bond and credit markets.

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"Instead of a trade war with the United States, Europe now faces the threat of a trade war with China", Felbermayr said in a statement.

Also helping sentiment was a strong-than-expected reading on US capital goods data for February.

If a trade war does erupt, both sides are likely to share the blame. These countries will be willing to take charge if the USA products become expensive in China.

Schwab analysts noted that China presented a "measured response" to the U.S. announcement, saying it would target 128 United States products, including ethanol, fresh fruit, pork, steel and wine.

The market's two biggest sectors slumped the most.

The American Chamber of Commerce in China said its members wanted the US administration to advocate more strongly for a level playing field and reciprocal treatment to improve market access -despite concerns that the current actions could disrupt the global economy.

American industry, agriculture in particular, as well as members of the president's own Republican party have voiced strident opposition to his recent trade moves - but the latest actions against China did receive some support on Capitol Hill.

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