Although President Donald Trump blames the trade gap with China on unfair trade policies and bad trade deals, most economists say that other factors — such as differential growth and savings rates — play a far bigger role. | Andy Wong/AP Photo China slams U.S. over ‘largest trade war in economic history’

The Chinese Ministry of Commerce lashed out at the United States on Friday, blasting Washington as a "trade bully" that has "ignited the largest trade war in economic history."

In a statement released hours after the U.S. began collecting 25 percent tariffs on $34 billion in Chinese imports, which Beijing responded to in kind, a ministry spokesperson vowed to fight back at the World Trade Organization and to "stand with other countries in defending free trade."


China also sought to portray the U.S. tariffs as "counterproductive and damaging," saying that they will hurt American companies and consumers far more than they will help them.

U.S. manufacturers, retailers and other sectors are also urging President Donald Trump to move quickly to end a trade war with China.

“Manufacturers want to see the administration get China back to the negotiating table as soon as possible in order to pursue a trade agreement that will redefine the U.S–China economic relationship for the better,” Jay Timmons, president and CEO of the National Association of Manufacturers, said in a statement. “Tariffs, though, have not and will not solve the existing problems in China. Tariffs will bring retaliation and possibly more tariffs.”

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Many business groups have favored putting pressure on China to end policies and practices that have led to the loss of valuable U.S. intellectual property – which was the rationale the Trump administration used to justify the latest levies.

But although most business groups believe the Trump administration has identified legitimate concerns about China's industrial policies, many fear the tariffs will simply damage trade between the two countries without persuading Beijing to change its behavior. Many of the groups have called for a multilateral approach to put pressure on China, but Trump has alienated a number of allies by imposing tariffs on their steel and aluminum exports.

The latest counter-tariffs from Beijing will hit farmers of soybeans and pork especially hard, as China is a vital export market with its growing middle class.

“China dealt its latest blow to American agriculture today with threats of even more tariffs on the horizon. Following Canada’s tariffs on U.S. products earlier this week, America’s farmers and families are staring down a dark path with no signs of relief in sight," said Casey Guernsey, a spokesman for Americans for Farmers and Families, a farm group opposed to Trump's trade policies.

The Trump administration is already preparing to hit an additional $16 billion worth of Chinese goods with a 25 percent duty as early as August, with China expected to again respond in kind.

In addition, Trump has threatened to hit another $200 billion worth of Chinese exports with a 10 percent tariff as a result of Chinese retaliation to his initial action. If that occurs, it's expected to be met with more Chinese action.

China, the European Union, Mexico and Canada have collectively raised duties on more than $22 billion worth of U.S. exports in retaliation for the new steel and aluminum tariffs imposed by Trump.

“There is no longer a ‘threat’ of a global trade war — the battle has begun. These tariffs are officially being imposed on products sold by American businesses, and consumed by American families,” said Hun Quach, vice president of international trade for the Retail Industry Leaders Association. “The recent onslaught of tariffs will jeopardize manufacturing and agriculture jobs in the U.S., while driving up prices on household items.”

Trump, like no other president in recent history, has blamed the large U.S. trade deficit with China and the rest of the world on unfair trading practices and trade deals that have left the United States with relatively low tariffs, or import taxes, compared with the rest of the world.

Most economists say that other factors — such as differential growth and savings rates — play a far bigger role in determining the size of the trade deficit, and new data released Friday by the Commerce Department underscores the difficulty Trump could have in reducing the trade gap as long as the U.S. economy is growing at a healthy clip.

The monthly goods trade deficit with China widened to $33.2 billion in May, from $28 billion in April, the report said. The cumulative goods trade deficit with China through the first five months of the year totaled $152.2 billion, compared with $138.5 billion in the same period last year.

The overall monthly U.S. goods and services trade deficit declined slightly to $43.1 billion in May, from $46.1 billion in April. However, for the first five months of the year, it totaled $245 billion, up from $227 billion in the same period in 2017.

The U.S. trade deficit tends to widen during periods of strong U.S. economic growth because increased consumer and business demand brings in more imported goods.

The International Monetary Fund has forecast the U.S. economy to grow 2.9 percent this year, compared with 2.3 percent in 2017, aided by the tax cuts passed last year by Congress. In contrast, Chinese economic growth is forecast to slow to 6.6 percent this year, from 6.9 percent in 2017.

Ironically, the trade deficit with China and the rest of the world could fall if an escalating tit-for-tat trade war significantly hampers U.S. economic growth, thereby depressing demand for imported goods.

“Our members are already feeling the impact of earlier tariffs, in the form of rising costs and operational disruptions, and these latest moves will only make matters worse,” said Peter Robinson, president and CEO of the U.S. Council for International Business, in a statement.

“While we appreciate the goal of the Trump administration to force the Chinese side to make concessions on its poor treatment of U.S. companies, we believe these tariffs will not have the desired effect. Rather, they will negatively impact the American economy and workforce, even if they are maintained for just a short time," Robinson said.