China hits back in Donald Trump tariff war

As Donald Trump presses on China has hit back with a slate of retaliatory measures, escalating a trade war between the world’s two largest economies.

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Donald Trump is proceeding with his trade war, declaring there is “no room left” for Canada and Mexico to escape his threatened 25 per cent tariffs, which will take effect at midnight on March 4, local time, after he granted both nations an initial 30-day pause.

The announcement that there would be no last-minute deal caused US stocks to fall sharply and swiftly, while prompting warnings from trade experts the plan could “decimate” US manufacturing while raising prices for everyday Americans.

At the same time, China has hit back at the US with a slate of retaliatory measures in response to the latest tariff increase, escalating a trade war between the world’s two largest economies.

The co-ordinated action across government bodies – including a series of new tariffs on American products as well as controls on US companies – was announced just as the White House’s additional 10 per cent levy on all Chinese products came into effect.

China’s finance ministry said the country was imposing an additional 15 per cent tariff on US chicken, wheat, corn and cotton products, and an additional 10 per cent tariff on sorghum, soybeans, pork, beef, seafood, fruits, vegetables and dairy products. The new tariffs from China are set to go into effect on March 10.

The country’s commerce ministry said it added 15 American companies to an export control list and 10 American companies to China’s “unreliable entity” list, prohibiting them from exporting or importing in China or from making new investments in the country.

In the US, the tariff increase imposed on Mexico and Canada caused the Nasdaq composite to drop by 2.6 per cent, the Dow by 1.5 per cent and the S&P 500 by 1.8 per cent – the index’s largest daily drop of the year to date.

Ottawa responded by saying Canada was ready to impose retaliatory tariffs on the US.

In February, outgoing Canadian Prime Minister Justin Trudeau announced that he would respond to the US trade action with “25 per cent tariffs against $C155bn ($172bn) worth of American goods. This would include immediate tariffs on $C30bn worth of goods as of Tuesday (local time), followed by further tariffs on $C125bn worth of US products in 21 days to allow Canadian companies and supply chains to find alternatives”.

Canadian Foreign Minister Melanie Joly said the country was ready to implement the plan, declaring: “Let’s be clear, if Trump is imposing tariffs, we’re ready. We are ready with $C155bn worth of tariffs. We’re ready with the first ($C30bn) tranche of ­tariffs.”

Mr Trudeau has made clear the Canadian response would mean tariffs on a range of products ranging from American beer, wine and bourbon to fruits and juices, vegetables, perfume, clothing and shoes, household appliances and furniture, sporting goods, and a range of materials ­including lumber and plastics.

The US President also suggested that a $100bn investment in America by the Taiwan Semiconductor Manufacturing Company would work to the advantage of the US in the event of Beijing isolating or taking Taiwan.

While Mr Trump acknowledged the seizure of Taiwan would be a “catastrophic event”, he argued the $US100bn ($161bn) announcement by TSMC – the world’s biggest chipmaker – would “at least give us a position where we have, in this very, very important business, we would have a very big part of it in the United States”.

“So it would have a big impact if something should happen with Taiwan,” he said.

Mr Trump made it clear time had run out for both Mexico and Canada as he defended his use of tariffs, saying he would also target Beijing – though he did not reveal if he had spoken to Chinese leader Xi Jinping about his plans.

“Very importantly, tomorrow, tariffs – 25 per cent – on Canada and 25 per cent on Mexico. And that will start. So they are going to have to have a tariff,” Mr Trump said. “So what they will have to do is build their car plants, frankly, and other things, in the US. In which case, they have no tariffs.

“No room left for Mexico or for Canada,” he clarified. “The tariffs, they are all set. They go into effect tomorrow.”

The US President said it would now be “very costly for people to take advantage of this country. They can’t come in and steal our money and steal our jobs and take our factories and take our business and expect not to be punished. And they’re being punished by tariffs.” 

Mexico has also fagged plans to hit back at US tariffs with retaliatory duties of its own, with President Claudia Sheinbaum expected to reveal details on Sunday.

“I call on the Mexican people to face this challenge together, to remain united. I repeat, it is time to defend Mexico and its sovereignty. We must be vigilant and calm, with a cool head,” she told reporters.