China pledges to match tariffs on $16bn of American goods
China said it will begin imposing 25pc duties on an additional $16bn (€13.8bn) of American goods immediately after US levies take effect, making good on its pledge to retaliate in kind.
Customs will begin collecting the duties on the products from 12.01am on August 23, the Ministry of Finance said in a statement on its website yesterday.
The US announced earlier this week that its own tariffs on $16bn of Chinese goods would start that day. The Chinese list covers coal, oil, chemicals and some medical equipment.
The US levied 25pc duties on $34bn in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing.
That total could soon increase. The US Trade Representative's Office is reviewing tariffs on a further $200bn in Chinese imports and those duties could start once a comment period ends on September 6. In response, China has threatened up to 25pc tariffs on $60bn in American imports.
While trade tensions are being ratcheting up, China's trade surplus with the US stood at $28.1bn in July, close to the record-high in June, data released yesterday showed.
China's exports grew faster than expected, while imports surged, showing both domestic and international demand have so far been able to shrug off the uncertainty of the trade conflict.
Exports rose 12.2pc in July in dollar terms from a year earlier, the customs administration said, faster than the forecast 10pc.
Imports climbed 27.3pc, leaving a trade surplus of $28bn.
As the world's largest exporter, China is still benefiting from robust global demand, but increasing tensions and rising trade barriers are weighing on the outlook.
"The higher-than-expected imports were pushed up by energy prices, which narrowed the trade balance," said Iris Pang, greater China economist at ING Wholesale Banking in Hong Kong.
"The impact of tariffs on exports is yet to be reflected. We will see a full-month tariff effect in August."
In the meantime, China's economy is showing signs of weakness - the yuan has been on a losing streak for more than a month, the equity market has suffered declines, and other early indicators are pointing to a slowdown.
The central bank has made it more expensive to bet against the yuan in a bid to ease pressure on the currency.
"Looking forward... the outlook for China's exports is grim in view of the escalating trade war," said Chang Shu and Fielding Chen of Bloomberg Economics.
"Our view is that exports will become a drag on growth" and policy support will be stepped up." (Bloomberg)