China set to respond to new round of US tariffs

A Chinese worker looks on as a cargo ship is loaded at a port in Qingdao Shandong Province

West Texas Intermediate and international-benchmark Brent crude oil futures are under pressure early Wednesday after China said it will retaliate against the latest round of us tariffs on Chinese imports.

The Trump administration has maintained that the tariffs are necessary to force China into changing economic behavior it says harms the US.

A US-China trade war will reduce global output by 0.7 per cent by 2020, with China's economy taking a 1.3 per cent hit and US GDP dropping 1 per cent, Oxford Economics said in a research note on Tuesday, before the new list was released. Washington has long criticized China's trade surplus with the United States and has demanded Beijing cut it.

Those demands could get even more strident if the yuan's sharp drop in recent months raises the ire of the United States, which has in the past repeatedly criticized Beijing for manipulating its currency to gain an unfair trade advantage. "Of course, China will retaliate, probably dollar for dollar", Hufbauer said.

China has now either imposed or proposed tariffs on $110 billion of USA goods, representing the vast majority of China's annual imports of American products.

All of this adds up to range bound trade over the near-term.

Trade with countries along the Belt and Road totaled 4.57 trillion yuan, up 11.3 percent year on year, 2.7 percentage points faster than the average growth rate, data showed.

China's crude oil imports in July rose for the first time in three months, but were still at their third lowest monthly level so far this year, as independent refiners continue to suffer from the new tax regime eroding their refining margins.

August 7: The US announces that the second tranche of tariffs, which will hit $16 billion worth of Chinese goods, will go into effect on August 23. "Additional trade war bickering could destroy the business models for many vehicles". It would likely have to impose penalties on USA companies doing business in China to make up the difference.

The latest commentary from state media on Wednesday took a softer line after resorting to personal attacks against Trump earlier in the week, saying China could get through the storm but refrained from directly mentioning the US president.

On July 6, the USA began taxing the 818 goods, worth $34 billion, remaining from the April list.

The US announced earlier this week that its own tariffs on US$16 billion of Chinese goods would start on Aug.23.

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