Chinese president to counter Trump in unwanted trade war

Bloomberg

The first punches have been thrown in a potential trade war and now Xi Jinping is poised to match Donald Trump with a tit for tat response.
The next flurry of jabs may be imminent. In his announcement of tariffs on Chinese goods on June 16, Trump vowed additional duties if China retaliated — which Beijing immediately did.
Details of US restrictions on investments from China will follow in the next two weeks, according to Trade Representative Robert Lighthizer.
Analysts increasingly expect the confrontation to be a war of attrition. While China has shown a willingness to make a deal on shrinking its trade surplus with the US, it has made clear it won’t bow to demands to abandon its industrial policy aimed at dominating the technology of the future.
“The Chinese view this as an exercise in self-flagellation, meaning that the country that wins a trade war is the country that can endure most pain,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. China “thinks it can outlast the US. They don’t have to worry about an election in November, let alone two years from now.”
The two nations moved to the brink of a trade war after the Trump administration announced new tariffs on imports would take effect from July 6.
A 25 percent tariff will be imposed on $34 billion in goods imports, with further duties on another $16 billion in imports under consideration. In response, China said it would charge tariffs of the “same scale and intensity” on goods from the US, adding that all trade commitments made during the previous weeks of negotiations are now off the table.
“We could be dangerously approaching such a trade war,” Jack Reed, the ranking Democrat on the Senate Armed Services Committee, told Fox News.
S&P 500 Index futures dropped 0.5 percent and the yen strengthened in early Asian trading on Monday as concern about the trade spat sapped risk appetite. South Korean chipmakers, which make parts used in Chinese products, retreated.
“China does not want the trade war, but facing a capricious Washington, China has no choice but to fight back vigorously in defense of its national interests, the trend of globalisation and the world’s multilateral trading system,” according to an unsigned commentary in the state media Xinhua.
Aside from slapping tariffs on American products, China’s arsenal of potential retaliatory measures is formidable, and it could inflict heavy punishment on the more than $200 billion of investment by American companies in China.
Increased safety inspections and delays in approving imports are possible tools, as is consumer boycotts of American goods sold in China’s rapidly growing retail market, or stemming a flow of free-spending tourists to the US.
China’s punishment of South Korea for allowing the US to station a missile defense system on the peninsula cost that nation billions of dollars, and it has used similar tactics against the Philippines and Japan as well. China also has a pivotal role in Trump’s goal of disarming North Korea because without its participation, sanctions have little chance of success.