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China announces it is imposing new tariffs on 128 US products

China is implementing new tariffs on meat, fruit and other products from the US as retaliation for American duties, heightening fears of a potential trade war between the world's two largest economies.

Beijing's latest move, announced by its finance ministry in a statement dated April 1, is direct retaliation against taxes approved by President Donald Trump on imported steel and aluminum. Chinese officials had been warning over the last few weeks that their country would take action against the US.

The tariffs begin on Monday, the finance ministry statement said.

China's Customs Tariff Commission is increasing the tariff rate on pork products and aluminum scrap by 25 percent. It is also imposing a new 15 percent tariff on 120 other imported US commodities, from almonds to apples and berries.

All told, the extra tariffs will hit 128 kinds of US products, multiple outlets reported. The list of new duties matches the proposed list released by the government on March 23, according to Reuters.

At that time, China said the affected U.S. goods had an import value of $3 billion in 2017 and included wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol and ginseng.

Analysts say that Beijing is reluctant to escalate trade disputes with Washington, as its economy is still fairly dependent on exports and, because it runs a surplus with the US, it would appear to have more to lose in any trade war.

But some influential commentators in China have called for a more robust response to the US' next set of tariffs, the details of which are yet to be announced but which are expected to be aimed at strategic sectors such as robotics, which Beijing is promoting as part of its industrial policy.

Retaliating against soyabean shipments could have a big impact on US farmers, many from states that voted for Trump in the 2016 presidential election. But it would also involve significant pain for China. The country relies heavily on the US for the product, which is used as an animal feed.

The Trump administration justified its aluminium and steel tariffs on national security grounds. Chinese steel groups at the time warned that the impact of the US tariffs would fall disproportionately on other countries, although a number of US allies have pushed for exemptions. China accounts for less than 1 percent of American steel imports.

Beijing's focus is to prevent the EU and Japan from joining the US side in trade disputes, Arthur Kroeber of Gavekal Dragonomics, a Beijing-based research group, wrote in a commentary last month.

"China knows it can hold its own in a commercial conflict with any individual rival, including the US. But a concerted effort by the industrial democracies to constrain China's mercantilist development program would cause it much more pain," he wrote.

Trump announced in March that the US will also impose duties on about $50 billion in Chinese goods to punish Beijing for what Washington sees as widespread violations of American intellectual property.

US Trade Representative Robert Lighthizer has until April 6 to release the list. US Commerce Secretary Wilbur Ross said on March 28 that an announcement on the measures will come "very shortly". China has said that it has a plan to act further if the import levies on its goods goes ahead.

Many fear escalating trade tensions between Beijing and Washington could damage the global economy.

For one, Nobel Prize-winning economist Robert Shiller said, following China's first threat of tariffs on 128 products, that uncertainty about tit-for-tat trade measures could result in an "economic crisis".

"It's just chaos: It will slow down development in the future if people think that this kind of thing is likely," he told CNBC.
 


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