European exporters shift trade to avoid higher United States tariffs

China urges domestic firms to boost non-American imports as trade war with US escalates

The Trump administration on Tuesday announced a package of tariffs targeting Chinese exports valued roughly at $200 billion.

Much of what the U.S. imports from China is apparel, handbags, shoes and electronics - products that were largely spared in earlier tariff lists.

This builds on 25 per cent tariffs on $US34 billion worth of Chinese imports into the US that took effect at midnight on Friday, and carries out US President Donald Trump's threat to respond to any Chinese retaliation to those taxes. The officials said they tried to target goods that would reduce the harm to U.S. consumers.

The Trump administration has accused companies in China of repeatedly committing intellectual property theft and other unfair trade practices, while it says China's government remains unresponsive to its concerns.

Trump last month asked the U.S. Trade Representative's office to identify $200 billion of Chinese goods that could be hit with 10 percent tariffs. China immediately retaliated with duties on the same value of USA goods, including soybeans and cars.

Tariff hikes are "hitting immediately the bottom line" of companies that rely on the free flow of trade across countries, said Mats Harborn, president of the European Union Chamber of Commerce in China. -Chinese trade war spreads.

China's retaliation to those measures was "without any worldwide legal basis or justification", Lighthizer said Tuesday.

"They were the ones who started everything by hurting us", the official said.

"Trump's escalation of trade hostilities makes it increasingly hard to envision an exit path from an all-out trade war".

The administration will consult on the products over the summer, and make a final decision on tariffs after August 30. "This new round of proposed tariffs takes the fight onto yet another level from which it is going to be hard for either side to make a graceful retreat", said Eswar Prasad, former head of the International Monetary Fund's China division. "Reliance on more and more taxes as a means to drive change is a high-risk strategy with USA importers and exporters at the heart".

In addition, the USA is considering separate duties on a further US$16 billion in Chinese goods, after a public hearing later this month.

The fight with China comes as Mr. Trump is also locked in a trade war with Canada, Mexico, the European Union and other US allies. "Moreover, they will blame any economic troubles on Trump and the United States".

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