"By contrast, a full-on trade war, which we do not expect, would entail escalating tit-for-tat protectionist measures that would have a deeply negative impact on trade".
China will levy tariffs on 106 U.S. products, including soybeans and cars, state broadcaster CCTV reported on Wednesday, the latest indication that a trade war might break out between the world's two largest economies.
USTR said the public can submit written comments on the tariffs until May 11, and it will hold a public hearing on them on May 15 in Washington. The effective date of China's moves depends on when the US action takes effect. "If someone wants to talk, our door is open", said Wang Shouwen, vice-minister of commerce.
"It is still uncertain how this will play out", Julian Evans-Pritchard, an economist at Capital Economics, wrote in a research note Wednesday.
China is taking the move "to defend its legitimate rights and interests and safeguard the multilateral trading system", the ministry said in a statement.
The question now is whether the two sides will intensify their efforts to punish each other before they sit down to negotiate.
China's list on Wednesday included soybeans, the biggest USA export to China, and aircraft that weigh up to 45 tons.
The Chemical Industry Association of Canada said the country's producers will likely suffer a "secondary impact" by seeing more US products in markets where they compete. "Investors believe a trade war will hurt both countries and their economies eventually". Last week, the head of Xi Jinping's new executive, Liu He, warned US Treasury Secretary Steven Mnuchin that his country was willing to defend against US tariffs and called for both sides to continue being rational. Farmers are especially vulnerable targets in trade spats because they rely so much on foreign sales.
It's notable that the many agricultural products listed would seem to target Trump's base, and particularly the home constituency of current U.S. Ambassador to China Terry Branstad, the former governor of Iowa, one of whose principle exports is soya. That's the thing about a trade fight: both sides gets hurt.
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The Ministry of Commerce (MOC) in a statement said that the US' move was "an evident violation" of rules of the World Trade Organisation (WTO).
McDonald reported from Beijing. The dollar briefly extended early losses, while China's yuan skidded in offshore trade.
The latest 25 per cent levy on US goods could create some opportunities for Canadian soy exporters, but will also force Canada to fend off imports at home and defend sales to 69 other markets, said Soy Canada executive director Ron Davidson.
The US move, broadly flagged last month, is aimed at forcing Beijing to address what Washington says is deeply entrenched theft of US intellectual property and forced technology transfer from US companies to Chinese competitors, charges Chinese officials deny.
Chinese foreign ministry spokesman Geng Shuang said China had shown sincerity in wanting to resolve the trade dispute through negotiations.
Last year, the USA ran a $375 billion trade deficit in goods with China. Companies and consumers will have the opportunity to lobby to have some products taken off the list or have others added.
"The tech industry will feel like overall it dodged a bullet", the source said, but added that traditional industrial goods manufacturers, along with pharmaceuticals and medical device firms, could suffer.
The tariffs do not immediately go into effect.
It noted in a statement published by state broadcaster CCTV that the Chinese government was ready to take equal measures on USA products to safeguard China's interests and said it would give Beijing its full support.
Meanwhile, Davidson said replacing US soybeans will be challenging because Canada doesn't have the extra volume even though it is the fastest-growing field crop in the country.