DONALD Trump has hit China with tariffs on up to $60 billion of imports to retaliate against the "theft" of American intellectual property.

The move is certain to ratchet up trade tensions between the world's two largest economies.

The President warned it would be the "first of many" trade actions and signed the order that also could result in restrictions on Chinese investment in the United States.

The move sent stocks diving amid rising market fears the United States could provoke a trade war, since China has vowed to retaliate.

Washington also said it would at least temporarily exempt the European Union and six other countries from steep steel and aluminium tariffs announced this month, easing the immediate threat of a trade dispute with US allies.

"We have a tremendous intellectual property theft situation going on," Mr Trump said as he signed the new trade order.

Senior White House economic adviser Everett Eissenstat said the new import duties would target industrial sectors where "China has sought to acquire an advantage through the unfair acquisition or forced technology transfer from US companies."

 

US Trade Representative Robert Lighthizer within two weeks is due to publish a list of the products that will be slapped with tariffs.

Vice President Mike Pence hailed the new measures as just one more "promise made and a promise kept by president Trump.".

The new action "makes it clear the era of economic surrender is over," Mr Pence said.

On Wall Street, the Dow Jones Industrial Average was down about two per cent ahead of the announcement, but recovered some losses shortly after 1800 GMT.

Mr Trump tweeted that the move was fulfilling an election pledge to protect the country's job and investment.

YEARS OF FAILED DIALOGUE

The new order directs the US Treasury to develop new proposals to increase safeguards on Chinese investments that could compromise national security.

In addition, USTR will go after China in the World Trade Organisation - a body Mr Trump and his officials have criticised as ineffective - charging Beijing with preventing US companies from freely licensing their own technology in China.

White House officials said the actions capped years of efforts to encourage China to end the alleged unfair practices through negotiations.

"Those dialogues failed under the Bush and Obama administrations," White House trade adviser Peter Navarro told reporters.

Mr Navarro said the President had been at pains to encourage Beijing to co-operate with American entreaties to open Chinese markets and end unfair practices, inviting President Xi Jinping to the US and travelling to Asia himself in November.

"The problem is that with the Chinese in this case talk is not cheap, it's been very, very expensive and finally the president decided we needed to move forward."

As Mr Trump has taken progressive steps toward confrontation, Beijing has repeatedly warned that trade wars benefit no one and it will not stand idly by as Washington imposed punitive new measures.

American industry, and US agriculture in particular, as well as members of the President's own Republican party have voiced strident opposition, concerned Trump's moves could spark retaliatory measures and hurt US exporters.

Mr Trump said the tough tariffs helped fulfil his election pledge to protect American jobs and industry. Picture: Mandel Ngan/AFP
Mr Trump said the tough tariffs helped fulfil his election pledge to protect American jobs and industry. Picture: Mandel Ngan/AFP

PROTECT YOURSELF

Mr Navarro told reporters that China benefited far more from trade relations with the US than the reverse, meaning retaliation could be difficult for Beijing.

In testimony before a Senate committee prior to the announcement, Mr Lighthizer said the areas that should be targeted by the new tariffs should be precisely those sectors where Beijing's economic plan outlines a vision of world dominance.

Those included aerospace and aeronautics equipment, maritime and rail transport equipment, new energy vehicles, agricultural equipment and advanced medical products.

"In every one of these, they say they want to be mostly self-sufficient in, I think, two or three years and basically world dominant by 2025," Mr Lighthizer said.

"In some areas, you just have to protect yourself from them so you won't be in a position where US industry is not wiped out by them."

In a sometimes tense exchange, Mr Lighthizer batted away criticism from Senators about possible collateral damage to US industries and consumers as a result of higher import prices, and in the event China retaliates against US agriculture.

And he derided as "nonsense" the claim the Trump administration has not thought through the process carefully saying trade officials designed an algorithm to target sanctions to have maximum impact on China and do minimum harm to US consumers.



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