China warns of 'counterattack' as United States tariffs take effect

Trade Wars: Trump loads first volley against China

Beijing insists it's the injured party.

"The United States will be opening fire on the whole world and also opening fire on itself", said China's Commerce Ministry spokesperson on Thursday, reiterating that Beijing will fight back.

Trump has threatened to progressively ratchet up USA penalties to a total of $450 billion in goods - which would represent the lion´s share of all of China´s exports to the United States.

But the tit-for-tat measures have escalated the trade dispute between the world's two largest economies and the world's commodities markets are increasingly embroiled in the bust-up. The U.S. government is afraid China is pursuing this in an unfair way.

But Shaun Rein, founder of China Market Research Group and author of the book "The War for China's Wallet", told us he has a different take on this situation.

And Beijing's tactics may go beyond tariffs to include arbitrary quarantines and a costly uptick in customs inspections.

At 12:01 a.m., the US slapped a 25 percent tax on $34 billion worth of Chinese imports. It said they would damage the global economy unless other countries stop them. "I think products made in China are the best", said one shopper in a Beijing grocery story, who gave his name as Yang. The President and his aides clearly feel they have the upper hand in forcing Beijing to address the $375 billion trade deficit by buying more American goods to level the playing field.

"You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. OK?" Trump said. "So we have 50 plus 200 plus nearly 300".

That amount is higher than an earlier threat from Trump to target as much as $450 billion of Chinese exports.

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That would bring the total of targeted Chinese goods to $550 billion - more than the $506 billion in goods that China shipped to the United States previous year.

"China is the largest trading partner with the Port of Oakland and our exporters and importers are concerned about the potential effect of a trade war", said Mike Zampa, the Port of Oakland Communications Director. Chinese tariffs will reportedly target USA products such as soybeans, seafood and crude oil.

The clash with China comes as the Trump administration is also fighting over trade with American allies such as Canada and the European Union. Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the US auto industry and drive up vehicle prices. "It's very hard to see this happening in the current environment".

A member of China's central bank monetary policy committee, Ma Jun, said today that the first punches will have a "limited impact" on the Chinese economy.

On July 2, the U.S. Chamber of Commerce issued a study outlining the state-by-state impact of retaliatory tariffs from China and other countries.

U.S. Customs and Border Protection said in a notice it would begin collecting the 25 percent duties on 818 product lines identified in June by the U.S. Trade Representative's Office.

"We can probably say that the trade war has officially started", said Chen Feixiang, professor of applied economics at Shanghai Jiaotong University's Antai Colege of Economics and Management. "We urge the two governments to come back to the negotiation table".

International Monetary Fund chief Christine Lagarde has already sounded the alarm about the cycle of retaliation, saying it would only create "losers on both sides".

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