US hits China with $34B round of tariffs; Beijing strikes back

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China's Ministry of Commerce said Friday in a statement that the United States had launched "the largest trade war in economic history".

U.S. President Donald Trump has threatened to raise duties on up to $450 billion of imports from China. If demand drops, jobs will be in jeopardy.

China's tariffs, on the other hand, will hit agricultural products like soybeans and pork.

With these new protectionist policies, President Trump's main goal is to reduce the flow of Chinese imports and push American consumers to buy domestically-made products.

China on Friday approved new guidelines to further stimulate household consumption, in a bid to stabilise the economy as it braces for a full-blown trade war with the United States.

China central banker Ma Jun said the first punches will have only a "limited impact" on the nation's economy, trimming GDP growth by 0.2 percentage points. "The math is simple".

Beijing's taxes hit USA -made aircraft, cars, computer chips, fuel, pork and soybeans.

Behind the trade war, there is conflict within the Trump administration.

There are 18 states that grow about 96% of the US's soybeans, according to government statistics. The populism fueled in part by trade issues can turn quickly back on Trump if he doesn't score a quick win ... or at least a deal he can sell as one.

Analysts said this was the quiet before the storm, with USA exports likely to fall off in the third quarter as both sides feel the effects of worsening trade relations.

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Xi's government has expressed confidence China can hold out against USA pressure, but companies and investors are uneasy.

Hikaru Sato at Daiwa Securities said markets had already factored in the impact of the first round of tariffs.

What is President Trump threatening?

Beijing has accused the USA of "firing on the whole world" with the measures, pointing out that most of the Chinese exports under attack are largely made by companies with foreign investment - including from America.

"You have to put all of this into context", Castaneda said in an email. Soy bean prices fell to almost 10-year lows this week in anticipation of China's response. Prices are about to go up on numerous import items, which will make clear that tariffs are actually - ta da! - taxes on domestic consumers rather than on foreign exporters. "All that is gone now". The New York Times reported that China's list included soybeans, a major North Dakota export. Tracy Grondine, a spokesperson for the US Apple Association, said China is a market that has "significant growth potential" for US-based apple farmers.

"China will feel some pain but not as much as these firms in the supply chain that contribute such a large share of the value added in Chinese exports", Peterson wrote. And the nation has already become the United States apple industry's sixth-largest export market, according to Grondine. But he commended Trump for directing the U.S. Department of Agriculture to give farmers "a safety net during this short-term uncertainty".

"This will impact growers coast to coast", Grondine said.

Earlier this week, AIM's monthly business confidence survey showed a sharp drop from last month, in large part because of increased fears of damaging tariffs.

A full-fledged trade war, economists at Bank of America Merrill Lynch and elsewhere warn, risks tipping the US economy into recession.

As the tariffs approached, the U.S. central bank warned the impending trade battle was beginning to darken the otherwise blue skies of the robust American economy, now in its 10th year of recovery. Daimler said those costs won't be completely passed on to customers.