The United States and China imposed tit-for-tat tariffs on $34 billion worth of each other’s imports on Friday.
Hours before Washington’s deadline for the tariffs to take effect, President Donald Trump upped the ante on America’s largest trading partner, warning that the United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount of U.S. imports from China last year.
China’s commerce ministry, in a statement shortly after the U.S. deadline passed at midnight on Friday, said it was forced to retaliate, meaning imported U.S. goods including cars, soybeans, and lobsters also faced 25 percent tariffs.
China lodged a case with the World Trade Organisation (WTO) against the United States, its commerce ministry said in a one-line statement late on Friday.
The impending tariffs were expected to impact American stock markets, but a strong U.S. jobs report released the same day offset any trade dispute fears.
China’s soymeal futures fell more than 2 percent on Friday afternoon before recovering most of those losses amid initial market confusion over whether Beijing had actually implemented the tariffs, which it later confirmed it had.
“Trade war is never a solution,” Chinese Premier Li Keqiang said at a news briefing with Bulgarian Prime Minister Boyko Borissov in Sofia before a summit with 16 central and eastern European countries.
“China would never start a trade war but if any party resorts to an increase of tariffs, then China will take measures in response to protect development interests.”
In the run-up to the deadline, there was no sign of renewed negotiations between U.S. and Chinese officials, business sources in Washington and Beijing said.
“Our baseline forecast assumes only a modest further escalation in the trade ‘war’ this summer,” Bank of America Merrill Lynch said in a Friday note.
Trump imposed the tariffs in response to years of unfair trade practices and intellectual property theft by the communist regime.
Referring to the possibility of more U.S. sanctions on Chinese goods, Trump told reporters aboard Air Force One on Thursday: “You have another 16 (billion dollars) in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300.”
China’s tariff list is heavy on agricultural goods such as soybeans, sorghum, and cotton, which some have suggested is a political barb aimed at American farmers in states that backed Trump in the 2016 election.
A China central bank adviser said the planned U.S. import tariffs on $50 billion worth of Chinese goods—$34 billion plus a planned follow-on list worth $16 billion—will cut China’s economic growth by 0.2 percentage points, the official Xinhua news agency reported Friday.
Importers of American retail goods hit by higher Chinese duties were reluctant to pass the costs on to consumers for now.
An analysis of over four dozen targeted U.S products showed that prices were little changed on Friday afternoon from earlier in the week. The products, all sold on Chinese e-commerce platforms, ranged from pet food to mixed nuts and whiskey.
Ford Motor Co said on Thursday that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.
Some Chinese ports had delayed clearing goods from the United States, four sources said on Friday. There did not appear to be any direct instructions to hold up cargoes, but some customs departments were waiting for official guidance on imposing added tariffs, the sources said.