China warns trade war will directly hit US consumers & financial markets

American consumers will be the biggest losers if a full-fledged US-China trade war breaks out, Beijing has warned, after President Donald Trump signed a memorandum to impose new tariffs targeting over $ 50bn of Chinese imports.

“The US’ persistence in advancing the Section 301 investigation and publishing the so-called findings to pick a trade war will undoubtedly undermine the interests of American consumers, enterprises and the financial market directly,” the Chinese Foreign Ministry said, a day after the US President ordered the US Trade Representative (USTR) to levy tariffs on at least $ 50 billion of Chinese imports. The move is designed to cut the US trade deficit and prevent alleged misappropriation of US intellectual property.

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FILE PHOTO: Aluminum ingots are piled up at a bonded storage area at the Dagang Terminal of Qingdao Port, China © Fayen Wong

Trump’s Thursday announcement of the new duties was accompanied by the 215-page USTR’s Section 301 of the 1974 Trade Act investigation report into China’s technology strategy, which, among other things, accuses Beijing of engaging in cyber espionage, intellectual property theft and pursuing aggressive investments and acquisitions in the US. “We have a tremendous intellectual property theft situation going on,” Trump said.

Beijing slammed Trump’s accusations as “unacceptable” and brushed aside all allegations of intellectual property theft.

“China’s innovation achievements are earned by the wisdom and sweat of 1.3 billion Chinese people, not by stealing and not by robbing anyone,” Foreign Ministry Spokesperson Hua Chunying insisted, during Friday’s press briefing. “Such achievements may make the US feel worried, but as the largest economy in the world, the US is supposed to be above making groundless accusations and blowing things out of proportion.”

The Foreign Ministry explained that low-cost and labor-intensive products from China have “considerably lowered” the consumption cost for the American consumer, all while helping the US deal with inflation. “The American consumers and enterprises will bear the brunt” of a trade war with China, Hua noted.

The spokeswoman also slammed statements from Trump’s economic adviser, Peter Navarro, who accused China of benefiting from bilateral trade much more than Washington benefits from trading with China.

“In making his remarks, [Navarro] is a little bit too arrogant. He has apparently miscalculated the situation and underestimated China’s resolve and capability to defend its own legitimate rights and interests as well as the price the US has to pay for its recklessness and willfulness,” the spokeswoman noted.

Although the USTR was given 15 days by Trump to propose a list of Chinese products that will be targeted, China’s commerce ministry has already threatened to take legal action against the US through the World Trade Organization. The ministry is also contemplating targeting 128 American products through an imposition of a 15 percent tariff on American steel pipes, fruit and on wine imports. It also wants to slap the US with a 25 percent tariff on pork and recycled aluminum imports.

Amid the looming threat of a trade war escalation, the World Trade Organization’s Director-General Roberto Azevedo urged the sides to talk, warning that there will be “no winners” in this confrontation.

“Disrupting trade flows will jeopardize the global economy at a time when economic recovery, though fragile, has been increasingly evident around the world. I again call for restraint and urgent dialogue as the best path forward to resolve these problems,” Azevedo said Friday.

The Internet Association, a Silicon Valley lobbying group comprising such giants as Google, Amazon and Facebook, also warned that a trade war between US and China will result in higher prices for consumers, and industry job losses. “The internet sector represents 3 million jobs and 6 percent of GDP, and these tariffs will leave our customers worse off, stifle growth, and make it harder for the digital economy to succeed,” the group said in a press release, warning that ordinary Americans will be caught in the crossfire.

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