Supply Chain Caught in Crossfire of U.S.-China Trade Conflict

President Donald Trump speaking at a rally at the Nashville Municipal Auditorium in Nashville Tennesse

The U.S. will implement a tariff on $50 billion in goods from China, the White House announced Friday, setting up a back-and-forth with the country that quickly retaliated with a tariff on products from the U.S.

Businesses in both countries, but especially the U.S., are growing increasingly concerned that the dispute could escalate further and chill global economic growth.

"We must take strong defensive actions to protect America's leadership in technology and innovation against the unprecedented threat posed by China's theft of our intellectual property, the forced transfer of American technology and its cyberattacks on our computer networks", Lighthizer says.

A set of retaliatory tariffs released by China today includes a plan to tax American lobster exports, potentially jeopardizing one of the biggest markets for the premium seafood. And that's what has our trading partners so unnerved.

USA soybean futures plunged 1.5 percent to a one-year low on concerns that an escalating trade fight with China will threaten shipments to the biggest buyer of the oilseed, traders said. "China is a powerful guardian and has enough ammunition to defend existing trade rules and fairness".

It's too early to tell which manufacturers will pass higher costs on to customers or seek cheaper suppliers outside China, should the tariffs take effect in three weeks' time. Most consumer goods from China such as smartphones and TVs were left off the list.

That doesn't appear to bhave deterred Beijing.

The Trump tariffs, which the USA government says are punishment for intellectual property theft, will be enacted in two waves. It said a decision would be announced later.

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The media response came as China announced tariffs on $34bn of U.S. goods including agricultural products, cars and marine products which will also take effect from 6 July.

Farmers are also anxious about harm caused by retaliation. "Thus, the growth and inflation impact on the USA economy will depend in large part on China's response, as well as the impact trade tensions have on global growth".

San Diego-based Qualcomm also still needs China's approval for its $44 billion purchase of NXP Semiconductors, a Dutch company.

Trump outraged Canadian, Mexican and European leaders last month by imposing punishing tariffs on imports of steel and aluminum to protect United States producers from allegedly unfair competition. "Beijing has a freer hand for informal retaliation, which will now start to increase".

Renewed worries about an escalating trade conflict sent shares in Chinese telecoms gear maker ZTE Corp tumbling on Friday. It said last September that it expects China to spend almost $1.1 trillion over the next 20 years buying more than 7,200 new airplanes. For example, both Singapore and Chinese Hong Kong impose virtually no tariffs or trade restrictions on other countries, according to the WTO.

The tariffs were in response to complaints that China requires or pressures foreign companies to hand over technology.

The irony for Gordon and others in Minnesota's massive agriculture sector is that Trump's protective tariffs could cut significantly into the trade surplus that they worked hard to develop, leaving the country with an even larger overall trade deficit. American officials said they would suspend threatened tariff increases on up to $150 billion in Chinese goods.

The White House has announced a 25 percent levy on technology-related products worth around $50 billion.

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