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World Trade war between U.S. and China moves from threat to reality

WASHINGTON — A trade war between the world’s two largest economies officially began Friday morning as the Trump administration followed through with its threat to impose tariffs on $34 billion worth of Chinese products, a significant escalation of a fight that could hurt companies and consumers in both the United States and China.

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The penalties, which went into effect at 12:01 a.m., will undoubtedly prompt quick retaliation by Beijing. Chinese officials immediately said they would be forced to retaliate, but their statement did not provide specifics. Previously, the Chinese government has said it will tax an equal amount of U.S. exports, including pork, soybeans and automobiles.

The escalation of the trade war from threat to reality is expected to ripple through global supply chains, raise costs for businesses and consumers and roil global stock markets, which have been volatile in anticipation of a prolonged trade fight between the United States and almost everyone else.

The Trump administration is waging trade wars on multiple fronts as it imposes tariffs on foreign steel, aluminum, solar panels and washing machines from places like Canada, Mexico, the European Union and Japan. Yet the tariffs on China, the world’s largest manufacturing hub, affect a much larger share of products and a greater percentage of companies that rely on global supply chains, potentially hurting U.S. companies even more than the Chinese firms the Trump administration is targeting.

Trump’s aggressive stance toward China is aimed at pressuring the country to curtail what the White House describes as a pattern of unfair trade practices and theft of U.S. intellectual property. In addition to the tariffs, the White House is placing restrictions on investment and visas for Chinese nationals.

But the trade measures come at a cost for U.S. firms, which are facing potentially devastating disruptions to their businesses.

As of Friday morning, companies like Husco International, a Wisconsin-based manufacturing company that makes parts for companies like Ford, General Motors, Caterpillar and John Deere, now face a 25 percent increase on a variety of parts imported from China. Austin Ramirez, Husco International’s chief executive, said that increase would immediately put him and other U.S. manufacturers at a disadvantage to competitors abroad.

“One of the big scary unknowns is we don’t know how China will react,” Ramirez said. “There are lots of things they could do to make life difficult for U.S. businesses operating in China that would be detrimental to us.”

This article originally appeared in The New York Times.

Ana Swanson © 2018 The New York Times

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