This is a fight between unilateralism and multilateralism, protectionism and free trade, might and rules.
That’s from Chinese foreign ministry spokeswoman Hua Chunying, speaking to reporters at a regular briefing on Wednesday, following the Trump administration’s latest trade broadside which rippled through global markets and shattered a tenuous calm.
For its part, the Commerce Ministry called the USTR’s publication of a new list targeting $200 billion in Chinese imports “totally unacceptable” and insisted that China would be forced to retaliate.
As a reminder, Trump has now taken this well beyond China’s capacity to respond mechanically with its own tariffs. In short, Trump seems to think that if he simply slaps more tariffs on Chinese imports than China can mathematically respond to, he’ll “win” by default:
Needless to say, global equities did not take this well. The Shanghai Composite, which was enjoying a bit of rebound after falling for seven straight weeks, slumped more than 1.7%. Here’s the 3-day chart:
Especially hard hit were Qingdao Haier (an air conditioner and refrigerator manufacturer), Hunan New Wellful (a pig farm operator) and Shandong Denghai Seeds.
The offshore yuan fell the most in a week and is now sitting back near 6.70 where Yi Gang verbally intervened last week.
Underscoring the tension, China’s Vice Minister of Commerce Wang Shouwen, in comments to Bloomberg, accused the Trump administration of “not honoring its words” and promised Beijing would “never yield to blackmail.”
Commenting on the bilateral trade discussions between the two countries, Wang said Washington “ignored the progress, adopted unilateral and protectionist measures” and ultimately “started a trade war”. He went on to predict how this will ultimately play out. We’ll just leave you with that prediction:
The U.S. behavior represents a typical ‘trade bully,’ posing a grave threat to the global value chain. It will hamper global economic recovery, hurting many businesses and ordinary people around the world.