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Here’s who pays the price for brewing U.S.-China trade war

As a trade showdown between the U.S. and China escalates, there's fears of how a trade war could hurt both countries. Special correspondent Katrina Yu reports from Beijing on how recently announced tariffs will affect farmers, importers, retailers and consumers on both sides of the Pacific.

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  • Judy Woodruff:

    And now how this showdown is seen from inside China.

    The escalating punches and counterpunches are stoking anger and fears there of a trade war that could hit both countries.

    From Beijing, special correspondent Katrina Yu reports.

  • Katrina Yu:

    On the outskirts of Beijing, dinner is served for some of farmer Yang Fuli's 800 China's pigs. China's growing middle class has meant a bigger appetite for meat. But his pigs wouldn't grow or survive without soybean meal, much of which is imported from the U.S.

  • Yang Fuli (through interpreter):

    Soybean meal is a feed which provides nutritional balance and protein.

  • Katrina Yu:

    And now farmer Yang could be paying a lot more to feed them, after China announced it would be slapping imports of U.S. soybeans with a 25 percent tariff.

    The levy will also be added to more than 100 other American goods, including cars and planes.

  • Zhu Guangyao (through interpreter):

    China has never given in to external pressure. External pressure will only make Chinese people even more determined.

  • Katrina Yu:

    China is firing back in response to a list of items released by the Trump administration yesterday. President Trump says it's about leveling the playing field.

  • President Donald Trump:

    China is going to end up treating us fairly. For many years, they had free rein. They don't have free rein anymore.

  • Katrina Yu:

    The political pressure will be high on President Trump and his base of support in many soybean-growing states.

    And farmers will be hit hard, says Paul Burke, the North Asia regional director for the U.S. Soybean Export Council.

  • Paul Burke:

    It will have a negative impact on the prices that U.S. soybean farmers will receive, and soybean farmers are already just barely getting by on the margins that they're receiving. And anything that would depress that price would have a serious detrimental impact to those farmers.

  • Katrina Yu:

    Putting levies on U.S. soybeans, which are also used to make cooking oil, is a high-stakes move for China, as it risks food inflation domestically. Many had believed that it would be too sensitive for Beijing to touch. But they were wrong, says economic Jeremy Stevens –

  • Jeremy Stevens:

    And this idea that you can sort of pressure China into different positions, that's proven to not be true. And China isn't afraid to do things that markets struggle to, as I say, metabolize.

  • Katrina Yu:

    But China is quick to remind the U.S. that it threw the first punches, starting with 30 percent duties on solar panels and washing machines, then the 25 percent tariffs on imported steel and 10 percent on aluminum just weeks ago.

    The move forced Huayang Steel Mill in China's northern Hebei province to shift its strategy of focusing on the American market this year.

  • Yue Guanyu (through interpreter):

    The part of our industry which exports to America is facing a big loss. Orders have decreased by at least half.

  • Katrina Yu:

    The measures were Washington's first strike in a battle to address a global trade imbalance. But while exemptions have since been given to U.S. allies, including Canada, Australia and the European Union, the White House is making sure China continues to feel the pinch.

    America's trade deficit with China, comprised mostly of computers and other electronics, soared to $375 billion last year, according to U.S. figures, up 8 percent from 2016.

    But Chinese analysts like Bian Yongzu of Renmin University say this isn't what these tariffs are really about.

  • Bian Yongzu (through interpreter):

    Where there's a political dispute resulting in higher tariffs, the purpose isn't to solve a trade imbalance or trade dispute between China and the U.S. It's more a release of anger.

  • Katrina Yu:

    Justified anger, according to some. The U.S. has long accused Beijing of unfair trade practices, including relying on state subsidies and stealing intellectual property.

    American companies operating in China say they're forced to spill tech secrets in order to set up shop.

  • William Zarit:

    This is the most important economic relationship in the world. It's important for both countries. And yet it's lopsided. And we need to do something to get a level playing field, and talking for 20 years has not done it, so I guess the administration is saying, let's try something else.

  • Katrina Yu:

    That something else has sparked panic from businesses on both sides of the Pacific. A group of retailers, including Wal-Mart and Macy's, sent a letter to the Trump administration late last month, urging a rethink on extra levies on household items such as bedding, clothing and electronics routinely imported from China.

    While the new tariffs avoid these goods for now, costs will increase for American manufacturers who depend on Chinese machinery and imported parts. Washington's plan targets robotics, new energy vehicles and telecommunications.

    It's a tense time for tech companies in Beijing.

    This is Beijing's Zhongguancun, an area known as China's Silicon Valley. Many of the companies based here are worried their exports to the U.S. will be affected by these tariffs.

    "PBS NewsHour" approached dozens of these firms for comment, but all of them declined, scared to speak out, due to the sensitivity of the climate.

    Frances Bea helps Chinese tech start-ups crack the U.S. market, and says American consumers will pay the price for Chinese goods being shut out.

  • Frances Bea:

    It just means less options at a more cost-effective price. At the end of the day, really, it's going to be the consumers that sort of lose out, because they might not be able to get the latest and best technology.

  • Katrina Yu:

    Beijing already slapped $3 billion worth of tariffs on more than 100 American products this week, including fruit and wine.

    It's bad news for Beijing-based wine importer Claudia Masuger, who's waiting on an order for 14,000 of Californian red, and will soon find out whether she will have to foot higher taxes for them.

  • Claudia Masuger:

    We do have to see. The next container of American wine will arrive on the 6th of April. We will discover it. Of course, we're not happy to pay more tax. Who would be? And, at the end of the day, it's also not good for the consumers, because they then have to pay even more.

  • Katrina Yu:

    It's not just consumers paying the price for this brewing trade war.

    As farmers and industry groups deal with the fallout from today's announcement, others are bracing themselves for more possible tit-for-tat measures. But from China, analysts say the message is clear.

  • Jeremy Stevens:

    The United States is trying to play bad cop to a sort of society that doesn't want to be policed in that way by the United States.

  • Katrina Yu:

    And, so far, the escalation is showing no sign of letting up.

    For the "PBS NewsHour," I'm Katrina Yu in Beijing.

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