Trump finally has his trade war — the "largest in economic history"

Donald Trump’s trade war finally arrived Friday after China slapped retaliatory tariffs on U.S. goods in direct response to U.S. taxes on Chinese goods, which went into effect at midnight.

Labeling the president and his administration “a gang of hoodlums,” Beijing warned Washington it had kickstarted “the largest trade war in economic history.”

The U.S. tariffs impose a 25 percent duty on $34 billion worth of Chinese goods, with Beijing imposing equivalent levies on U.S. goods.

American products targeted by China include soybeans, cigars, electric cars, and whiskey.

“China will not fire the first shot, but it is inevitably forced to strike back to defend the core interest of the nation and its people,” a statement from the Ministry of Commerce in Beijing said. “We will report to the World Trade Organisation on a timely basis.”

Chinese state media took a more bellicose tone, with China Daily warning: “The Trump administration is behaving like a gang of hoodlums with its shakedown of other countries, particularly China,” adding the tariffs “have set off the largest trade war in economic history, demonstrating a typical hegemonic attitude against the rules of world trade.”

China’s state news agency Xinhua said Trump was shooting himself in the foot with his protectionist policies:

“Washington is sowing the seeds of its own defeat in the end. Tariffs will negate gains made by the public from tax reforms and deregulation, push up U.S. production costs, damage the competitiveness of businesses and their workers, and force companies to look outside the U.S. to maintain production.”

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The English-language Global Times posed a question: “If the U.S. is determined to escalate conflicts with China, then so be it. Perhaps the Trump administration can only clear its mind after a fight?”

But Trump seemed unfazed about his economic path Thursday, telling a rally in Montana that retaliatory tariffs by Beijing would trigger further levies on up to $500 billion worth of Chinese goods.

Trump has yet to respond publicly to the news that China has retaliated.

Across the Atlantic, Europe’s trade commissioner, Cecilia Malmstrom, weighed in, saying the escalation is “clearly damaging for the world economy,” adding: “Trade wars are bad and not easy to win.”

Despite the concern, financial markets remain relatively unaffected.

With Beijing and Washington seemingly unwilling to back down, we can expect the trade war to escalate further.

“At the moment, I don’t see how this ends,” Edward Alden, a senior fellow at the Council on Foreign Relations, told the New York Times. “This is very much in the president’s hands because he’s got advisers that seem divided, some substantively, some tactically. I just don’t think we’ve had any clear signs of the resolution he wants.”

Cover image: Donald Trump speaks during a campaign rally at Four Seasons Arena on July 5, 2018 in Great Falls, Montana. President Trump held a campaign style 'Make America Great Again' rally in Great Falls, Montana with thousands in attendance. (Justin Sullivan/Getty Images)