Canada 'caught in the crossfire' of US-China trade dispute

Chairman Xi speaks at the National People’s Congress in Beijing

ANALYST TAKE: "While markets have typically reacted negatively to any escalation on trade, the overall impact has been relatively modest under the circumstances which suggests investors are far from panic mode right now", said Craig Erlam, senior market analyst at OANDA. In a statement, it called the USA actions "completely unacceptable". The Foreign Ministry called the threats "typical bullying" and said Beijing would hit back with a counterattack.

China gave no details but earlier threatened "comprehensive measures" if Washington took more action. "And there are some reasons to believe that over the short term, the Chinese are better positioned to manage this", says Robert Ross, a professor of political science at Boston College and an expert on U.S.

But China imported only $130 billion worth of goods from the United States in 2017, while the USA imported $505 billion worth from China - making it impossible for them to keep up with the dollar-for-dollar if Trump moves forward with tariffs on the full $200 billion list.

More than 6,000 items could be affected - including burglar alarms, vehicle tyres, handbags, baseball gloves, carpets, toilet paper, dog food, and hundreds of food products.

"Rather than address our legitimate concerns, China has begun to retaliate against United States products", Lighthizer said in a statement.

The Chinese commerce ministry said that it was "shocked at the USA action" and warned that it would be forced to retaliate "to protect the core interests of the nation and its people".

Last Friday, the USA imposed 25% tariffs on Chinese imports worth $34bn (£25bn). China immediately retaliated with tariffs on its own list of $34 billion worth of American goods.

Although the trade war is escalating, it has not yet become a threat to economic growth and is not expected to have an impact on inflation.

Shares of NXP Semiconductors NXPI fell roughly 4 percent Wednesday after the report.

S&P 500 and Dow futures dropped around 1%, pointing to a weak opening on Wall Street later on Wednesday. Traders said they were keeping an eye on the key 6.7 per dollar level as pressure mounted on the currency.

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Donald Trump is readying tariffs on another $200 billion in Chinese imports, escalating a trade war between the world's two biggest economies.

If China responds with tariffs on energy, this could cut sales of USA energy goods, analysts and executives told Reuters last month, when Beijing first threatened to slap tariffs on us energy.

Senate Finance Committee Chairman Orrin Hatch called it "reckless", adding that the tariffs were "not a targeted approach".

The U.S. Chamber of Commerce has supported Trump's domestic tax cuts and efforts to reduce regulation of businesses, but does not back Trump's aggressive tariff policies.

"I love what the president has done in most cases, but the tariff is basically a tax on people who use aluminum", Pete Coors told CNN. Imposing taxes on another $200 billion worth of products will raise the costs of every-day goods for American families, farmers, ranchers, workers, and job creators.

They also said they remain open to working with China to try to resolve the dispute, but the response from Beijing so far has been unsatisfactory.

These tactics include the outright theft of trade secrets, government subsidies to homegrown tech firms and demands that USA and other foreign companies hand over technology if they want access to China's vast market.

"They are a vital trading partner, and we need to continue to do business with China without the sting of these tariffs", said American Soybean Association President John Heisdorffer in a news release.

Lighthizer said the initial $50 billion in US tariffs were aimed at goods that "benefit from China's industrial policy and forced technology transfer practices".

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