China customs delays clearing US goods as duties loom

China EU USA trade war alliance Donald Trump President Xi

GETTYBut the EU rejected any idea of allying with China against Washington

As the day dawned across the US on Friday, a new economic reality dawned with it: The tariffs long threatened against billions of dollars in Chinese goods took effect just at midnight ET while many Americans were sleeping - but Beijing was ready immediately with a wake-up call of its own.

However, the Chinese government stopped short of actually saying it had implemented tariffs, stirring market confusion.

Analysts say it can resort to some unconventional methods to inconvenience American businesses in China, with some fearing that it could mean tougher and subjective scrutiny on companies such as Starbucks and Apple, taking the trade war to uncharted territory. "If this ends at $34 billion, it will have a marginal effect on both economies, but if it escalates to $500 billion like Trump said then it's going to have a big impact for both countries".

"[The US has started the] largest trade war in economic history". The world's two largest economies slapped tariffs on $ 34 billion each on imports from the other country in an opening salvo that could soon take the entire world into an economic slowdown.

With only US$130 billion in United States imports to retaliate against, Beijing has said it will take "qualitative" and "quantitative" measures against the U.S., triggering fears it could cripple the operations of USA multinationals in China.

"Our baseline forecast assumes only a modest further escalation in the trade "war" this summer", Bank of America Merrill Lynch said in a Friday note.

So a trade war that seems to take aim at exactly that becomes an existential threat to the CCP.

Companies worry the dispute could chill global economic growth, but Asian financial markets took Friday's developments in stride.

Chinese shares, which have been battered in the run-up to the tariff deadline, reversed earlier losses to close higher, but the yuan remained weaker against the dollar.

Chinese Commerce Ministry spokesman Gao Feng said on Thursday that the proposed USA tariffs would hit many American and foreign companies operating in China and disrupt their supplies of components and assembly work.

From blue jeans to motorbikes and whiskey, the EU's hit-list of products targeted the most emblematic of American exports. An analysis of over four dozen targeted United States products showed that prices were little changed on Friday afternoon from earlier in the week.

On Thursday, Ford Motor said that for now, it will not hike prices of imported Ford and higher-margin luxury Lincoln models in China.

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The sources told Reuters that while there did not appear to be any direct instructions to hold up cargoes, some customs departments were waiting until they had received official guidance from the central government.

As the world's most developed nation and the rule-maker of the current global governing system, there is "astounding absurdity" in the United States complaining that it's been bullied in trade, the People's Daily, the flagship newspaper of the Communist Party of China, said in a Chinese-language commentary on Friday.

China and Russian Federation have hit back after U.S. tariffs on Chinese goods came into effect and President Donald Trump threatened to impose more.

Trump has vowed for years to tackle Chinese trade practices, accusing Beijing of stealing US intellectual property and slammed the $375 billion USA trade deficit with the country.

He added: "We have $200 billion in abeyance and then. we have $300 billion in abeyance. OK?"

"You have another 16 [billion dollars] in two weeks, and then, as you know, we have $200 billion in abeyance and then after the $200 billion, we have $300 billion in abeyance. OK?"

China accused Trump of using tariffs as "typical trade bullying". "A little fighting may be the only way the Trump administration clears its mind and allows everyone to sober up", the state-run Global Times said.

"Its unruliness looks set to have a profoundly damaging impact on the global economic landscape in the coming decades, unless countries stand together to oppose it".

"The tariffs are aimed at patent-intensive industries that rely on global supply chains, disadvantaging American producers and harming United States allies operating in the region", the PIIE analysis concludes.

On Thursday, the USA president outlined plans to bring in tariffs on more than $500 billion of Chinese imports.

Rob Carnell, chief Asia economist at ING, said: "This is not economic Armageddon".

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