Trade Dispute Between US And China Is Exacerbated

Forex News

Trade spat between Beijing and Washington escalated into an outright war last Friday. On July 6, the US imposed a 25% duty on Chinese imports of $34 billion. Beijing immediately responded with equal tariffs for soybeans, meat and vehicles.

As it became known, major Chinese ports have started clearing goods from the United States. Customs officers had delayed the clearance of some US goods on Beijing's penalty list last Friday, as they waited for official instructions from the central government on whether to start collecting the new import tariffs.

China has threatened with a retaliatory tariff on as many as 128 items imported from the US (these include steel scraps, steel piping, soybean and many others). Amid the escalating tensions, the US has warned of an additional round of tariff hikes on Chinese goods worth $200 billion. Both China and the US are actively considering a complaint before the World Trade Organization (WTO) for unfair trade practices.

The new tariff hikes by the US find the force of law, under the Section 301 of the US Trade Act of 1974, which vests the US President with unbridled power to deal with such cases of unfair trade practices by foreign countries. Section 301 allows investigation into trade practices of other countries and taking countermeasures, including hiking import tariff in response.