As Trump heads for Europe, trade strains start to show

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During an official visit to Bulgaria, China's No. 2 leader, Premier Li Keqiang, said "no one will win by fighting a trade war, yet China will take countermeasures in the face of unilateral moves".

Hours before Washington's deadline for the tariffs to take effect, President Trump upped the ante on its largest trading partner, warning that the U.S. may ultimately target more than $500 billion worth of Chinese goods - that's roughly the total of U.S. imports from China past year.

Beijing called it the beginning of "the biggest trade war in economic history" and retaliated with tariffs on billions of dollars worth of U.S. exports.

As the day dawned across the US on Friday, a new economic reality dawned with it: The tariffs long threatened against billions of dollars in Chinese goods took effect just at midnight ET while many Americans were sleeping - but Beijing was ready immediately with a wake-up call of its own.

The United States hiked tariffs on Chinese imports Friday and Beijing said it would be forced to make a "counterattack" in a dispute between the world's two biggest economies that U.S. President Donald Trump says he is prepared to escalate.

Companies worry the spiraling dispute could chill global economic growth.

Beijing has accused the U.S. of starting the "largest trade war in economic history".

While the world focuses on China tariffs, officials at the US Commerce Department are said to be referring to this week as "retaliation week", as responses from targets of the Trump administration's trade policy take effect.

Adding to concerns this week was a leaked report suggesting Trump had asked his officials to look at pulling the U.S. out of the World Trade Organisation (WTO) altogether. "As the tariff casualties mount, even many Trump voters are going to ask: When is the master negotiator actually going to negotiate a better trade deal?"

He added the United States is ready to target an additional $200 billion, and then $300 billion more should Beijing retaliate.

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US companies had US$256 billion in investment in China by the end of previous year, exceeding China's US$140 billion in the United States, according to a report by the National Committee of US-China Relations and Rhodium Group in April.

In other words, the USA and China are likely to impose penal tariffs on their entire imports from each other.

Beijing has accused the U.S. of "firing on the whole world" with the measures, pointing out that most of the Chinese exports under attack are largely made by companies with foreign investment - including from America.

The president believes this is the best way to close the trade deficit between the USA and China.

Oreshkin said that Russian steel and aluminum makers suffered $537.6 million in damages from the new USA tariffs. "The trade relationship between the United States and China must be much more equitable".

This ship, carrying tons of USA soybeans, had been racing against the clock across the sea, trying to arrive in Dalian port before the tariff war started. Gregory Daco, head of USA economics at Oxford Economics, has calculated that they would pare growth in both countries by no more than 0.2 percent through 2020.

Longer term though a trade war posed a risk to the recovery of the whole global economy, he said.

A full-fledged trade war, economists at Bank of America Merrill Lynch and elsewhere warn, risks tipping the USA economy into recession.

Trump this month said he doubted he could achieve a deal he likes until after the US midterm elections in November. The oilseed is the top agricultural commodity that the US ships to China by far and is among the largest products for overall exports.

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