U.S.-China trade war to be fought in the trenches

Vastavam web: The U.S.-China trade war will be fought in the trenches, and it’s going to get ugly. The first round of tariffs hits on Friday, and U.S. President Donald Trump says they might come to cover more than $500 billion of goods. Exporters will feel the pain first, but uncertainty will also dampen investment, impede research and twist reform. It marks a moment of mourning for those who hoped the world’s two largest economies could work things out.The American tariffs kick in after midnight in Washington (0401 GMT) on July 6, covering $34 billion of imports. That will be followed by taxes on another $16 billion. Trump said Thursday that the final amount of imports covered could exceed $500 billion. Beijing will retaliate in kind, at least at the start.

More damage could come from economic aftershocks. Equity markets in China and the United States have swooned already, in part because investors worry that global supply chains will need to reroute. Some American businesses say they are already scaling back or postponing capital spending because of uncertainties around trade, according to minutes from the Federal Open Market Committee. In China, the government has been forced to moderate monetary policy to cushion financial markets.In the People’s Republic, Reuters reported the bureaucracy may have already started to move against American companies. Administrative punishments can range from approval delays to product boycotts to blocking deals – like Qualcomm’s attempt to buy NXP. In addition, China’s reform process might slow, as officials hold back liberalisations for use as concessions during future negotiations.