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Sieren's China: Trump flexes his muscle in brewing trade war

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Trump escalates China trade war with extra tariffs

The Chinese Commerce Ministry released a statement saying, "If the United States loses its sense and publishes such a list, China will have to take comprehensive quantitative and qualitative measures and retaliate forcefully".

The United States has now threatened five different rounds of tariffs on Chinese goods whose collective worth is close to $500 billion.

Late Monday, Trump also announced he might pursue $200 billion more in tariffs on Chinese goods, though it was unclear whether the list would include more chips or computing products that might impact Intel. China responded with levies valued at an equal amount on American-made imports. The yield on the US 10-year Treasury fell to 2.89 percent from 2.92 percent.

So it's no surprise that the massive tariffs President Donald Trump has threatened and China's response could lead to a trade war that would cripple the iPhone company, and Apple CEO Tim Cook has been working behind the scenes with both governments to make sure it stays out of the crossfire.

"The bottom line is that trade wars are akin to zero-sum games or mutually assured destruction", cautioned Sean Darby, chief global equity strategist at Jefferies.

The United States and China have the world's biggest trading relationship but official ties are increasingly strained over complaints Beijing's technology development tactics hurt American companies.

The Deutsche Bank economists Brett Ryan, Peter Hooper, and Matthew Luzzetti found that the tariffs introduced by Trump could push up inflation and result in a drag on economic growth. Seeking to push back, China has already announced plans to retaliate proportionally against goods such as crude oil, petroleum and petrochemical products once the USA duties go into effect.

Retaliation from Moscow could have a more muted impact on the USA, however.

There are dangers for the US economy too.

That move comes after his decision to slap a tariff of up to 25 per cent on $50 billion of Chinese imports, including including heavy equipment and medicines. Higher prices on imported goods could dampen consumer sentiment and pressure inflation. The move, which went into effect March 23, was seen as targeting China particularly and included temporary exemptions that shielded USA allies Canada, the European Union and Mexico.

Chinese President Xi Jinping has repeatedly vowed to widen market access for foreign investors and cut foreign ownership caps in certain industries, as Beijing tries to position itself as champion of global trade in the face of what it calls US protectionism.

Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Mr Trump's watch. "She remarks, "$50 billion one way, $50 billion back, escalation to an additional $200 billion. A counter punch was swift in coming, with a statement from Beijing on Friday night that it would "strike back forcefully".

Initially, 545 U.S. products valued at $34bn will be targeted by China, mimicking the Trump administration's tariff rollout. China is designated the exporter of a high-tech product, but that product was overwhelmingly made elsewhere. Trump has tried to throw a lifeline to ZTE, which has been struggling to survive under US sanctions.

And Beijing has other ways to inflict pain on American companies.

Chinese President Xi Jinping and Russian President Vladimir Putin attend a signing ceremony at the Great Hall of the People in Beijing on June 8.

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