Trade War Is Here: China Raises Tariffs On U.S. Goods In Retaliation To Trump Tariff Hikes

China has announced plans for reciprocal tariffs on 128 U.S. products that include pork, wine, fruit and steel in response to U.S. President Donald Trump's announcement of imposing tariffs on $60 billion worth of products coming in from China. Beijing said it will take measures against the U.S. goods in two stages if it cannot reach an agreement with Washington.

The U.S. goods, which had an import value of $3 billion in 2017, could see a 15 percent duty, while a 25 percent tariff could be imposed on U.S. pork and recycled aluminium goods, according to the statement.

However, as U.S. exports to China are set to hit $170 billion this year, China's tariff imposition seems to be more of sending a message to the U.S. that the tariff game can be played both ways. U.S. agricultural products, particularly soybeans, have been flagged as the biggest area of potential retaliation by Chinese President Xi Jinping's administration. Tariff imposition on agricultural products would affect Trump directly as rural America are a big part of Trump's support base.

Beijing also announced that it could take legal action under World Trade Organization rules and called for dialogue to resolve the dispute.

Donald trump's decision to impose tariffs on China are based on USTR's 301 investigation into China's state-led, market-distorting efforts to force, pressure, and steal U.S. technologies and intellectual property. In section 301 of the trade act, the U.S. government has given itself the power to unilaterally impose sanctions against countries which it decides are not trading fairly.

The U.S. will impose 25 percent duties on targeted Chinese products to compensate for the harm caused to the American economy from China’s policies, according to a fact sheet released by USTR. The proposed product list will include items in aerospace, information and communication technology and machinery. USTR will announce the proposed list in the next “several days,” according to the fact sheet.

“This has been long in the making,” Trump had said, adding that the tariffs could affect as much as $60 billion in goods. “We have a tremendous intellectual property theft situation going on” with China affecting hundreds of billions of dollars in trade each year, he said. As he signed the tariffs order, Trump told reporters, “This is the first of many.”

The U.S. President has reportedly also directed Treasury Secretary Steven Mnuchin to propose new investment restrictions on Chinese companies within 60 days to safeguard technologies the U.S. views as strategic, said senior White House economic adviser Everett Eissenstat. The Trump administration is framing the move as a major turning point in U.S.-China relations.

The announcements have sparked a global fear of trade wars with stock markets in the U.S. down 700 points while Asian stock markets took a dive on the news, with Japan's Nikkei index sliding as much as 3 percent in early Friday trade.

(The above story first appeared on LatestLY on Mar 23, 2018 08:13 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).