China confirms retaliatory tariffs as data shows trade war’s minimal impact

China has announced it will start imposing tariffs of 25% on US$16 billion worth of US imports from the August 23 – the date that the US will implement tariffs on the same amount of Chinese goods.

Commodities targeted by Beijing in the reciprocal tariffs include coal, oil, steel products, autos, chemicals and some medical equipment.

As quoted by the Straits Times, China’s Ministry of Commerce said in a statement that the US tariffs on Chinese goods are ‘very unreasonable’ and China will retaliate in order to protect its interests and the multilateral trading system.

Despite the escalating U.S-China trade war, Chinese exports have surged in July, growing at 12.2% year-on-year, and the trade surplus with the US continued near record highs.

According to Channel News Asia these are the first readings to give a picture of the effect of the trade war, showing it has had little impact so far.

China’s surplus with the United States – one of the main targets of the US sanctions – only shrank marginally to US$28.09 billion in July from a record high of US$28.97 billion in June. Economists do expect the trade surplus to reduce more in the coming months, giving time for the tariffs have more of an effect.

The growing tensions have seen the US threaten tariffs on up to a further $US200 billion of Chinese imports, for which China is ready to retaliate again with tariffs on an additional US$60 billion of US goods.

According to Wang Tao, the head of China economic research at UBS in Hong Kong, quoted in the Straits Times, “We’re not yet at the point of no return but we’re edging closer to it.”