Donald Trump hits China with $200 billion in new tariffs

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Earlier on Tuesday, the Trump administration unveiled a list of Chinese exports, worth some $200 billion, that it plans to slap with 10 percent tariffs.

On Tuesday, US officials issued a list of thousands of Chinese imports the Trump administration wants to hit with the new tariffs, including hundreds of food products as well as tobacco, chemicals, coal, steel and aluminium, prompting criticism from some US industry groups.

Investors said trade war worries may slip to the background as investors begin to focus more closely on second-quarter earnings over the coming weeks.

China's commerce ministry said on Wednesday it was "shocked" and would complain to the World Trade Organisation, but did not immediately say how it would retaliate.

'To protect the core interests of the nation and its people, the Chinese government will be forced to impose necessary countermeasures'.

The announcement was a response to China's decision to impose 25 per cent tariffs on US$34 billion of American goods last Friday in response to a similar USA levy.

"Trade experts we have consulted point to the potential for anti-U.S. social media campaigns, delays or blockage of regulatory approvals, travel bans, investment restrictions, among other options", Raymond James analyst Ed Mills said in a report. The United States and China launched what Beijing called the "biggest trade war in economic history" Friday, July 6, imposing tariffs on billions of dollars of each other's goods amid a spiraling dispute over technology.

In Asia, the Shanghai Composite closed 1.8 per cent down, Hong Kong's Hang Seng was 1.3 per cent down, and Tokyo's Nikkei fell 1.2 per cent.

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At 11.30 pm IST, the Dow Jones Industrial Average was down 141.78 points, or 0.57 per cent, at 24,777.88, while the S&P 500 was down 11.70 points, or 0.42 per cent, at 2,782.14.

The lower rate of 10 percent tariffs this round will lessen the impact, as will the "significant depreciation" of the Chinese yuan against the dollar which "does provide a substantial offset to the loss in export competitiveness for Chinese exporters due to higher US tariffs", he told CNBC. The trade war could also jeopardize China's help in confronting North Korea's nuclear program.

Meanwhile, farmers hurt by Chinese tariffs on USA agricultural exports pose a political risk for Mr. Trump and for Republicans, especially as the November midterm elections loom. "It will also result in retaliatory tariffs, further hurting American workers", a Chamber spokeswoman said.

Senate Finance Committee chairman Orrin Hatch, a Republican, said the move "appears reckless and is not a targeted approach".

The Retail Industry Leaders Association, a lobby group representing the largest U.S. retailers, said: "The president has broken his promise to bring 'maximum pain on China, minimum pain on consumers'".

That prompted fears it might go beyond matching Washington's duty increases by disrupting operations for United States companies in China.

The dollar traded at 111.02 yen, pulling back from a near two-month peak of 111.355.

"It is impractical for China to match tariffs by quantity", said Frances Cheung, head of Asia macro strategy at Westpac in Singapore. Chinese diplomats have sought to build alliances in Washington while making the case for how USA investment in China is mutually beneficial for the two countries.