Beijing has requested dispute consultations with the United States at the World Trade Organization over US tariffs slapped on imports of Chinese steel and alumium products, according to a WTO document published Tuesday.
China’s representative to the world trade body has requested “consultations” with Washington over its decision to impose “additional ad valorem rate of duty on imports of certain steel and alumium products,” according to the document, which stated that the complaint was filed on April 5.
China claims the duties of 25 percent and 10 percent on imports of its steel and aluminium products violate international trade rules.
The Chinese “request for consultations”, which marks the first step in a full-blown legal challenge at the WTO’s Dispute Settlement Body, is part of an escalating trade confrontation between Washington and Beijing.
Early last week, Washington also published a list of $50 billion in Chinese goods to be hit by tariffs over what Washington says is widespread theft of intellectual property and technology.
China quickly launched a challenge against those proposed tariffs, also requesting that the WTO organise consultations.
Beijing also retaliated by unveiling planned levies on $50 billion worth of major US exports including soybeans, cars and small aircraft.
But Trump hit back again late Thursday, instructing trade officials to consider tariffs on an additional $100 billion in Chinese imports.
Global stock markets were spurred higher Tuesday by Chinese President Xi Jinping, whose remarks have soothed worries over a US trade war, dealers said.
Following boosts to stock market indices across Asia and Europe, US benchmarks also climbed in early trading.
“US stocks are higher in early action, with trade war concerns being tamped down by a conciliatory speech from Chinese President Xi, though uncertainty toward the White House continues to fester,” Charles Schwab analysts said in a note.
In a closely watched speech Xi pledged a “new phase of opening up”, adding that Beijing “does not seek a trade surplus” and wants to boost imports.
Dealers pounced on the comments as a sign that a possible trade war between the world’s top two superpowers can be averted, after weeks of nail-biting uncertainty.
“Xi cautioned against a cold war mentality and stated the China should push for free trade and uphold a multilateral trading system,” wrote David Cheetham, chief market analyst at XTB.
“Rising tensions on trade between the two largest economies in the world have weighed on markets in recent weeks but it should be remembered that he implementation of tariffs is yet to be finalised, and the comments from Xi seem to suggest that he is keen to avoid any further escalation.”
Investor sentiment has been rocked in recent weeks as the White House has announced a series of tariffs mostly on Chinese goods as part of Donald Trump’s America First protectionist agenda, fuelling fears of potentially devastating tit-for-tat measures that could hammer the global economy.
China’s massive surplus with the US is a key complaint of Trump’s who accuses the country of unfair trade practices that hurt American jobs.
However, on Tuesday Xi said he would move to liberalise automobile investment, significantly reduce tariffs on cars this year and protect intellectual property — all areas that have been high on the list of demands by Washington.
“Xi has succeeded in batting the ball back into the US court, so we now watch and wait for a response,” said IG analyst Christ Beauchamp.
“A firm negative (response) will send equities tumbling back down, but if Mr Trump nods his approval of this first step towards negotiation we might see stock markets edge up once more.”
– Russia in the red –
The one exception to rising indices has been the Russian stock market, which has taken a hammering following the introduction of US sanctions targeting oligarchs close to President Vladimir Putin.
US sanctions have meanwhile buoyed oil prices, which extended Monday’s rally.
“Driven primarily by psychological factors, the price surge is due to fears of supply tightening as a result of US sanctions,” Commerzbank Commodity Research said in a note.
“We regard such fears as exaggerated, in the case of both Iran and Russia. OPEC exports are likely to remain fairly stable even if US sanctions are resumed.”
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