In what could be seen as a tit- for- tat affair, China has decided to slap more tariffs on U.S. products. This time, Beijing is targeting 106 U.S. imports which will further unnerve markets already shaken by the impending trade war between the two countries.
China’s Ministry of Commerce has not given a date of effectivity for the tariffs to take effect. However, the department has disclosed that China’s target is to levy $50 Billion worth of tariffs on U.S. exports every year.
Among the products covered by the 25% levy on U.S. imports include soybeans, whiskey and automobiles.
China is the biggest market of American soybeans. Sales of soybeans to China were worth $14 Billion in 2017. The tariff on this agricultural crop will be a big test for President Donald Trump. Eight of the nine biggest producing states for soybean voted for him in the last presidential elections.
On the U.S. side, President Trump has imposed tariffs on the following Chinese imports: robotics, information technology, communication technology and aerospace.
China’s announcement on the additional tariffs on U.S. imports came 24 hours after the United States disclosed its list of Chinese products that would be subject to new charges.
Markets worldwide have been shaken up by what analysts believe is a brewing trade war between the United States and China.
Peter Oppenheimer, Chief Global Equity Strategist for Goldman Sachs thinks that at least, for now, the exchanges between the two countries can be seen as a “trade battle”:
“I think the anxiety the market is reflecting is that it could escalate into a generalized trade war.”
China’s announcement on the new round of tariffs was met with massive investor selling of U.S. stocks as the Dow Jones Industrial average crashed by more than 450 points. Boeing and Caterpillar were the biggest losers.
The effects could be felt across other equity markets as well. In Europe, the pan- European Stoxx 600 hit a session low of 0.8 percent when news of the tariffs hit the markets.
The Chinese Yuan was also a casualty. The Yuan fell by 4 percent at 6.3015 per one US Dollar.
Neil Dwane, global strategist at Allianz Global Investors thinks China is playing the part of the victim:
“I think Beijing is very keen to show that it is not going to be bullied, too. China is going to position this as them responding to American aggression rather than necessarily being part of the problem.”