Donald Trump sets 25% tariff on $50 bn of Chinese goods, faces retaliation

US President Donald Trump announced hefty tariffs on $50 billion of Chinese imports on Friday as Beijing threatened to respond in kind, in a move that looks set to ignite a trade war between the world's two largest economies. Trump, whose hardline stance on trade has led him to wrangle with allies, said in a statement that a 25 per cent tariff would be imposed on a list of strategically important imports from China. 

He also vowed further measures if Beijing struck back. “The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against American exporters or American companies operating in China,” Trump stated. Earlier, China vowed to do just that, saying it would strike back, just hours before Trump’s statement. 

Trump has already said the US would hit another $100 billion of Chinese imports if Beijing retaliated. Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve US complaints over Chinese industrial policy, market access and a $375 billion trade gap. “If the United States takes unilateral, protectionist measures, harming China's interests, we will quickly react and take necessary steps to resolutely protect our fair, legitimate rights,” Chinese Foreign Ministry spokesman Geng Shuang said.

Trade war on 'hold', but tariffs will be back if China breaks promises: US

The Trump administration won’t impose tariffs on Chinese products for now, after the two nations made progress on trade issues during two days of talks, Treasury Secretary Steven Mnuchin said.

“We’re putting the trade war on hold. So right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin said on “Fox News Sunday.”

President Donald Trump has threatened to impose tariffs on as much as $150 billion in Chinese imports to punish Beijing for allegedly violating American intellectual property and unfair trade practices. China vowed to retaliate with tariffs on everything from soybeans to airplanes.

Mnuchin’s remarks will be a relief to investors, who had feared the world’s two biggest economies were on the brink of an all-out trade conflict. The International Monetary Fund has warned that a global trade war would undermine the broadest global upswing in years.

Trump's trade war and the $470 billion hit to the global economy

A full-blown trade war could cost the global economy $470 billion, according to Bloomberg Economics.
The U. S. decision to slap tariffs on steel and aluminum may just be the beginning, with President Donald Trump warning of more levies and other economies promising to respond. Cecilia Malmstrom, the European Union’s trade chief, vowed on Monday to “stand up to bullies.”

In a scenario where the U. S. implements a 10 percent levy on imports and the rest of the world retaliates, analysis by Bloomberg Economics published Monday says the global economy would be 0.5 percent smaller by 2020 than it would have been without tariffs. According to economists Jamie Murray and Tom Orlik, that’s an extreme scenario, “but it’s no longer an impossible one.”

They see the move rippling through the world economy in a number of ways, starting with faster inflation that dents U. S. consumer demand, which in turn hurts other economies’ exports. Retaliation would see the inflation shock replicated in other nations, with goods substitution hitting