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Intensifying US-China trade war hitting consumers, corporations hard

Refrigerators with "Made in America" decals, which make up only 20 percent of products, are displayed at a Home Depot branch in Maryland, near Washington, on Sept. 23, 2018. (Mainichi/Masahiro Nakai)

WASHINGTON/BEIJING -- The introduction of the latest punitive tariffs on imports of consumer products by both Washington and Beijing on Sept. 24 in an expanding trade war is expected to hit consumers and corporations hard across the globe.

The new sanctions cover 200 billion dollars of imports from China to the United States with an additional 10-percent tariff and American products worth 60 billion dollars going into China with a 5 to 10 percent increase in new import taxes.

Among businesses on the frontline of the continuing battle is "Home Depot," a major household electric appliance shop, near the U.S. capital. A male clerk at the shop said most of materials on display are made in China. He hopes that the sanctions against China will not cause price hikes and keep customers away.

Only 20 percent of refrigerators for sale, priced between 500 and 4,500 dollars, had decals saying "Made in America." This decal means that 70 percent of its parts were produced in the United Sates. The business has no choice but to raise prices, as many of their products use Chinese parts that are targeted in the latest sanctions.

The third set of punitive tariffs introduced by Washington cover a variety of daily-use consumer items, including home appliances, furniture and toys, while earlier measures focused on items for corporate use, such as semiconductors and chemical products.

According to a Deutsch Bank analysis, 78 billion dollars of consumer products will be hit by the new measures. This is compared to just 3.7 billion dollars of items affected by earlier U.S. tariffs. Many of the products in the U.S. market targeted by the latest move are highly dependent on Chinese imports, such as air conditioners and vacuum cleaners, with 93 and 78 percent coming from China, respectively. The additional set of tariffs will substantially affect consumer confidence as well. In addition, retaliatory tariffs by China on American agricultural products are triggering worries among U.S. farmers that their products will lose out against competitors from other countries.

Meanwhile, China's ministry of commerce warns that nearly 50 percent of companies to be affected by Washington's moves are in fact foreign companies with production facilities in China -- emphasizing that the U.S. actually has more to lose than China in the latest quid-pro-quo of retaliatory moves.

Still, the wounds to the Chinese economy are bleeding, too. Observers expect an advancing inflation for food products in the near future, as Beijing responded with additional tariffs on agricultural items and natural resources for which China depends on American suppliers. The expanding U.S. tariffs will curb Chinese exports, and a Hong Kong group of small and medium-sized companies predict that one third of smaller factories will have to be shuttered as a result of the trade war.

The Organization of Economic Cooperation and Development (OECD) lowered its world economic growth projections for 2018 and 2019, saying that the trade conflict is negatively affecting corporate investment plans. Now the world economy as a whole is being sucked into the trade war of attrition between Beijing and Washington.

(Japanese original by Masahiro Nakai, Washington Bureau, and Kiyohiro Akama, Beijing Bureau)

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