Trade tensions starting to affect global economy

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The United States hiked tariffs on Chinese imports Friday and Beijing announced it was retaliating against American goods in a technology dispute between the world's two biggest economies that President Donald Trump says he is prepared to escalate.

The industry source said China had been unable to address the Trump administration's concerns about Chinese trade policies in at least five key area, including forced technology transfers, Chinese industrial overcapacity, government subsidies, SOE reform, and Beijing's restrictions in the cloud computing industry.

Despite frustration with Chinese trade practices, USA businesses have warned for months that Trump's trade threats may do more harm than good.

China's Commerce Ministry, in a statement shortly after the United States deadline passed at 4.01am GMT on Friday, said that it was forced to hit back, meaning $34bn worth of imported U.S. goods, including autos and agricultural products also faced 25% tariffs.

There was no evidence of last-minute negotiations between USA and Chinese officials, business sources in Washington and Beijing said.

However, while no details have been provided as yet, it looks like a Chinese retaliation may be in the works.

There was no evidence of last-minute negotiations between USA and Chinese officials, business sources in Washington and Beijing said.

Some economists warn that an all-out trade war would put the brakes on the US economy by eroding business confidence, interrupting supply chains and increasing costs of imports to USA companies and consumers.

And Beijing's tactics may go beyond tariffs to include arbitrary quarantines and a costly uptick in customs inspections.

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China has said it would respond with tariffs on hundreds of US goods, including top exports such as soybeans, sorghum and cotton, threatening U.S. farmers in states that backed Trump in the 2016 US election, such as Texas and Iowa.

American Soybean Association President John Heisdorffer said the retaliatory tariffs will "sting" his industry.

It's not merely a tit-for-tat tariff exchange, but something more fundamental. Bank of America estimated in its report that just over $100 billion worth of goods had been targeted, or about 4.2% of total goods imports.

On Thursday, US President Donald Trump warned that the US may ultimately target over $500 billion worth of Chinese goods. Trump said. "So we have 50 plus 200 plus nearly 300".

Faced with President Donald Trump's threat to target U.S. imports of cars from Europe, German and French government officials plan to meet next week in Paris to coordinate strategy.

That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States past year.

U.S. officials accuse China of building its emerging industrial dominance by stealing the "crown jewels" of American technological know-how through cyber-theft, forced transfers of intellectual property and state-sponsored corporate acquisitions.

China's response to the list includes Soybeans - a massive moneymaker for US farmers - Sorghum and Cotton.

China's commerce ministry called the USA actions "a violation of world trade rules" and said that it had "initiated the largest-scale trade war in economic history".

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The overseas edition of the People's Daily ran a commentary (link in Chinese) saying, "There's a simple truth to the idea of launching trade wars with multiple countries: When two people fight, they might both be responsible".

But China is not the only country to find itself in Washington's crosshairs lately when it comes to trade.

The American Chamber of Commerce in China appealed to both sides to negotiate a settlement.

States such as Louisiana export about $5.7bn of goods to China.

The change means China won't begin levying United States exports before Friday afternoon, Beijing time. "It's very hard to see this happening in the current environment".

After months of speculation as to whether or not it would occur, the trade war between the United States and China is now underway in earnest.

Economists have for months warned of the potential damage to the U.S. and global economies from aggressive trade policies and protectionism, which would raise prices and upend global supply chains.

The start of the trade war likely confirms the widening rupture between Trump and his own Republican Party, a traditional champion of free trade and big business.

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