"Clearly the first salvos have been exchanged and in that sense, the trade war has started. There is no obvious end to this" - Louis Kuijs, chief Asia economist at Oxford Economics.
The "largest-scale trade war" (as defined by China) launched at midnight, when the US announced $34 billion in tariffs on Chinese exports, and... confusion followed.
Duties on Chinese goods started just after midnight, or at 12:01 a.m. Friday in Washington, and just after midday in China. Another $16 billion of goods could follow in two weeks, Trump earlier told reporters aboard Air Force one, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of U.S. goods imports from China in 2017.
As we noted earlier, while China vowed to respond with countermeasures to the "unfair" US tariffs, no explicit announcement of just how China would retaliate followed immediately. Adding to the confusion, state-owned news agency Xinhua reported that China’s tariff actions in response took effect at 12:01 pm, however here too there was no detail, and the result was a spike in risk, as traders assumed that China was perhaps willing to concede early on without an explicit response.
To be sure, a token statement from the Chinese Commerce Ministry followed, with verbiage recycled from recent announcements:
“The United States has violated WTO rules and ignited the largest trade war in economic history. Such tariffs are typical trade bullying, and this action threatens global supply chains and value chains, stalls the global economic recovery, triggers global market turmoil, and will hurt more innocent multinational companies, enterprises and consumers.”
But it wouldn't be until a little after 3am EDT, during the press conference by Chinese foreign ministry spokesman Lu Kang, that China specifically laid out how China would respond. In the Beijing press conference, he called the US move "typical trade bullying" and noted that any side’s “hegemonic actions" in trade will not succeed, in response to questions about whether China and U.S. will hold talks. Some other highlights from his presser:
- When asked about how much U.S. goods will be affected, Lu says it’s a question for relevant departments
- China has been trying the best to help relevant parties understand the globalization objectively and to deal with trade issues rationally since March, Lu says
- U.S. tariff actions openly violate WTO rules and trigger global market turbulence: Lu
- China is confident to uphold multilateral and free trade system with other countries, Lu says
But most importantly, he said that China’s countermeasures took effect immediately after "unfair" U.S. tariff actions came into force, as Xinhua trolled Trump in a tweet, saying that "Battling with the world over trade, Trump seems to be making America ALONE again."
Battling with the world over trade, Trump seems to...