Economic Watch: US trade measures will backfire

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"Tariffs are beginning to take a toll on American businesses, workers, farmers, and consumers as overseas markets close to American-made products and prices increase here at home", U.S. Chamber of Commerce President and CEO Thomas J. Donohue said.

Beijing insists it's the injured party.

"China promised not to fight the first shot, but in order to defend the core interests of the country and the interests of the people, we are forced to take the necessary countermeasures", China's commerce ministry said in a statement.

Judging by the retaliatory tariffs targeted at the range of U.S. agricultural goods so far, China also seemed to be avoiding an escalation in trade tensions, analysts said.

The tariffs would mark a significant escalation in the trade dispute between the world's two biggest economies.

Products of beans made by a USA company are displayed for sale at an global supermarket Jenny Lou's in Beijing, China June 29, 2018.

USA officials have warned President Trump that the retaliatory tariffs will likely have a major impact on consumers and manufacturers by making imported goods and their component parts more expensive.

It is unclear whether the Trump administration appreciates how integrated the global economy has become or have properly thought through the consequences for the U.S. if Xi Jinping and the European Union leadership refuse to blink and subsequently cave in to the USA demands that they sell less to the United States and buy more from it.

"I think products made in China are the best", said one shopper in a Beijing grocery story, who gave his name as Yang.

The president upped the stakes on Thursday, saying the amount of goods subject to tariffs could rise to more than $500bn.

"You have another 16 (billion United States dollars) in two weeks, and then, as you know, we have US$200 billion in abeyance, and then after the US$200 billion, we have US$300 billion in abeyance".

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China said it would respond with measures of a "corresponding number and quality" if the USA produced a list of products that could be hit.

The most immediate impact, however, may be the price Williams will be able to get per bushel after even the threat of a trade war rattled the commodities market.

The U.S. runs a bilateral trade deficit of $336 billion with China and imports much more from it than the reverse, giving it an early advantage.

China has also banned imports of United States agricultural products such as poultry, cutting off America's ranchers and farmers from a major market for their goods.

Concurring, Rabobank economist Michael Every said the United States would go "very far" to block Chinese investments because there was strong bipartisan support to prevent China from achieving its goals to move up the value-added ladder and ultimately rival the U.S. as a world power.

President Donald Trump is fighting trade battles in all directions, not just with China. But he doesn't "see the war ending until there are casualties".

In addition to Friday's tariffs and in response to China's retaliation in June, Mr Trump has ordered tariffs on $200bn worth of imports and threatened tariffs on another $200bn. On the other hand, it is expanding restrictions on investments.

But, the longer the trade war goes on, the more severe the impact could become, the spokesperson said.

He said China imposes contractual restrictions on the licensing of intellectual property and technology by foreign firms into China, but does not put the same restrictions on contracts between two Chinese enterprises.

"This plays out over the next few months, until both sides start to feel a little pain and realise this isn't a bloodless march to victory", said Harris.

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