China trade war escalates

JPMorgan CEO Trade war could reverse economic growth

US and Chinese officials ended two days of talks on Thursday with no major breakthrough as their trade war escalated with activation of another round of dueling tariffs on $16 billion worth of each country's goods.

Earlier, a senior Trump administration official downplayed chances for success, saying China had yet to address USA complaints about alleged misappropriation of US intellectual property and industrial subsidies.

"The risk that current trade tensions escalate further with adverse effects on confidence, asset prices and investment is the greatest near-term risk to global growth", International Monetary Fund chief economist Maury Obstfeld told a news conference last month.

China has responded by threatening to impose new tariffs on $60 billion worth of United States goods, while Beijing could also target the local operations of United States corporations with inspections and boycotts as it has done in past disputes with South Korea and Japan.

There is concern that if the tariff exchange continues, China will sooner or later include US crude oil imports in the list of products to be sold more expensively in the world's second-largest economy. An NBC/Marist poll of Texas voters released this week shows that 40 percent believe tariffs will hurt the economy while only 31 percent say they will protect jobs.

The meetings this week in Washington appear set to highlight the continuing divide inside the Trump administration over how best to deal with Beijing and how China hawks are winning that battle.

They have assumed a direct impact on China's economic growth in 2018 of 0.1 to 0.3 percentage point, and somewhat less for the United States, but the impact will be bigger next year, along with collateral damage for other countries and companies tied into China's global supply chains.

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"In order for us to get a positive result out of these engagements, it's really critical that they (China) address the fundamental concerns that we have raised", the official said on a press call on the new USA security review law for foreign acquisitions.

The dispute centres around Mr Trump's demand for Beijing to drop its protectionist economic stance and buy more U.S. goods.

That figure would be far more than China imports from the United States, raising concerns that Beijing could consider other types of retaliation, such as making life more hard for American firms in China or allowing its yuan currency to weaken further to support its exporters.

The US and China both implemented tariffs on one another $US16 billion worth of each other's goods. The Office of the US Trade Representative is due to make a final decision on this after the end of this month. However, US President Donald Trump said he wasn't expecting much from this week's negotiations.

The latest action completes the first round of duties on $50 billion in Chinese products that President Donald Trump targeted.

Yet Beijing is not backing down despite insistence from Washington that it put the breaks on a technology development strategy that, according to the USA, features unfair trade practices. The list of USA products this time includes oil products and coal for the first time, S&P Global Platts reports. They follow last month's first round of tariff increases of the same size by both sides on $34 billion of each other's imports.

China's commerce ministry has said that it firmly opposes and reserves its right to retaliate to the latest batch of United States tariffs that went into effect on Thursday and targeted another $16bn worth of imports from the Asian country.

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