Trump: ‘We are not in a trade war with China’ as markets react to new tariffs

President Trump has tried to distance himself from the emerging trade war between the US and China as markets reacted to a new escalation in tariffs between the two economies.

On Tuesday, the US published an official list of 1,300 Chinese import goods to be targeted by tariffs, covering sectors including robotics, information technology and aerospace, CBNC reported.

The US Trade Representative Office claimed the tariffs are appropriate considering “the estimated harm to the US economy,” and that their aim is the “elimination of China’s harmful acts, policies and practices”, according to the Straits Times.    

However, in response, China announced additional tariffs of up to 25 per cent on US imports including soybeans, automobiles, chemicals and aircraft. This would match the latest US tariffs in amounting to approximately US$50 billion.

These retaliatory tariffs are politically sensitive, as they target goods produced in Trump’s core constituencies; China is the US’s biggest export destination for soybeans, worth approximately $14 billion in 2017.

According to an economist at Commerzbank AG in Singapore, quoted by Bloomberg, “the US list suggest that the government is targeting the ‘Made in China 2025’ initiative, while China’s retaliation intends to bring American’s back to the negotiating table.”

Following the announcements, Asian stocks fell 0.4 percent to their lowest in seven weeks.

The escalation could also affect the global supply chains of American tech companies, such as Apple and Dell. Whether the new tariffs are implemented depends on the result of a 60-day consultation period during which the US public can comment on the list of targeted goods.       

Such tit-for-tat tariffs look increasingly like the long-feared trade war between the US and China – something which President Trump refuted today.

Taking to Twitter, the President said: ‘We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the US. Now we have a Trade Deficit of $500 Billion a year and an Intellectual Property Theft of another $300 Billion. We cannot let this continue!’