Europe could suffer collateral damage in US-China trade war

Jean-Claude Juncker and Donald Trump

The Chinese government appeared to be looking towards the longer term as well, unveiling a new tax plan earlier this month that will boost household consumption and ease savings levels, which will help with its economic restructuring but also mitigate effects of a trade war.

Last week saw a worsening of the already severe trade conflict between Washington and Beijing, with the United States imposing higher tariffs on a wide range of technological goods imported from China.

Mr Trump has railed against Beijing for intellectual property theft and barriers to entry for United States businesses and a $375 billion USA trade deficit with China. It's very hard for American companies in the auto sector or in financial services to sell into the China market, because there's a lot of regulatory barriers. Trump's tariffs are meant to pressure Beijing to reform its trade policies.

The new trade regulations imposed by the Trump administration, which levy a 25 percent tariff on $34 billion worth of Chinese imports to the US, have "violated [World Trade Organization] rules and launched the largest trade war in economic history to date", China's Ministry of Commerce declared in a statement Friday. Companies are also including exit clauses in their purchase contracts with US suppliers, Reuters reported in March. The damage would threaten to undo numerous economic benefits of last year's tax cuts.

Rabobank reckons China may have to buy up to 15 million tonnes of US beans at tariff prices. It said American companies want fairer treatment but will be hurt by U.S.

Later that day, China's foreign ministry spokesperson announced that China has begun implementing new tariffs of 25 percent on some USA goods including automobiles and soybeans.

"For soybean producers like me this is a direct financial hit", Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade.

Trump has said that trade wars are "good and easy to win". Eastern Time. The Dow Jones Industrial Average was little changed at 24,340.

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Soybeans are the top USA agricultural export to China, with the trade worth $12.7 billion in 2017.

"The threat of additional duties comes at a fragile time in the development of the Chinese market for USA beef ... importers and distributors are still at a nascent stage of building sales and distribution channels for US beef", USMEF said.

U.S. President Donald Trump has threatened to escalate the trade conflict with tariffs on as much as $400 billion in Chinese goods if Beijing retaliates against the U.S. tariffs set to take effect on Friday. "Investors know what's going to happen and it has already been priced in", said Li Liuyang, senior foreign exchange analyst at China Merchants Bank in Shanghai, referring to the yuan market.

Li says the US introduction of tariffs "benefits no one". Chick-fil-A uses the cooker for its sandwiches.

Trump's confrontational outlook applies to other trading partners as well as China, said Tai Hui, chief strategist for JP Morgan Asset Management, in a report.

Foreign capitals initially hoped that Trump, who basks in his reputation as a dealmaker, was merely talking tough on trade in order to win a few concessions from other countries.

The first round of tariffs today could shave 0.15 percentage point and 0.1 percentage point off the Chinese and U.S. gross domestic product, respectively, Rabobank said in a recent report.

Consider what happened to the price of washing machines that were subjected to a separate series of Trump tariffs in January. With only $130 billion in US imports to retaliate against, Beijing has said it will take "qualitative" and "quantitative" measures against the USA, triggering fears it could cripple the operations of USA multinationals operating there.

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