The latest escalation of bruising trade war between China and the United States have brought imposing additional tariffs on each other’s goods. That has sent shockwaves through the global economy.
A new round of tariffs took effect from 04:01 GMT on Sunday, with Beijing’s levy of 5% on US crude oil marking the first time the fuel has been targeted since the world’s two largest economies started their trade war more than a year ago.
The Trump administration will begin collecting 15% tariffs on more than $125bn in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.
In retaliation, China started to impose additional tariffs on some of the US goods on a $75bn target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday.
The extra tariffs of 5% and 10% were levied on 1,717 items of a total of 5,078 products originating from the United States. Beijing will start collecting additional tariffs on the rest from 15 December.
The new round of tariffs promises more volatility when stock markets resume trading on Monday, although Wall Street is closed for the Labor day holiday.
Independent Australian market strategist, Greg McKenna, said that market concerns had been repeatedly soothed by conciliatory words from Beijing and Washington.
But he said reality could begin to bite with Sunday’s new round of tariffs.
“All the while the tariffs are actually being imposed and the global growth, earnings, and interest rate cycles are pointing down again,” he said. “On top of that, the inverted US yield curve suggests to many that at best the US economy is slowing materially and at worst that the recession count down has begun.”
The trade tariffs on China have contributed a slowing of the Chinese economy, as well as other countries’ economies in the region.
A snapshot of the country’s giant manufacturing sector released on Saturday showed that activity contracted for the fourth month in succession in August.
The Chinese yuan has also come under pressure and fell to an 11-year low against the US dollar last week. South Korea said on Sunday that its exports had fallen for the ninth month in a row.
But Chinese state media struck a defiant note on Sunday.
“The United States should learn how to behave like a responsible global power and stop acting as a ‘school bully’,” the official Xinhua news agency said.
“As the world’s only superpower, it needs to shoulder its due responsibility, and join other countries in making this world a better and more prosperous place. Only then can America become great again.”
Tariffs could not impede China’s development, said the official People’s Daily of the ruling Communist Party.
“China’s booming economy has made China a fertile ground for investment that foreign companies cannot ignore,” it said, in a commentary under the name Zhong Sheng, or “Voice of China”, which is often used to state its view on foreign policy issues.
Last month, Donald Trump said he was imposing tariffs on $300bn worth of Chinese imports previously spared in the trade dispute.
Some of the tariffs were later delayed until December in a concession to US retailers. Tariffs of 15% on cellphones, laptop computers, toys and clothing are to take effect on December 15.
The president has also announced that existing 25% tariffs on a separate group of $250 billion of Chinese imports will increase to 30% on 1 October.
Once all the measures have taken effect by December, nearly all of China’s $540bn worth of exports to the US will be subject to the levies.
The US trade representative’s office said on Thursday it would collect public comments until 20 September on a planned tariff increase to 30% on a $250bn list of goods already hit with a 25% tariff.
Trade teams from China and the United States continue to talk and will meet this month, but tariff hikes on Chinese goods set to go in place on Sunday will not be delayed, Trump has said.
For two years, the Trump administration has sought to pressure China to make sweeping changes to its policies on intellectual property protection, forced transfers of technology to Chinese firms, industrial subsidies and market access.
China has consistently denied Washington’s accusations that it engages in unfair trade practices, vowing to fight back in kind and criticising US measures as protectionist.