New Tariffs Imposed on Imports From China
Donald Trump kicked off the process of imposing tariffs on a further $200bn of imports from China, as the trade war between the two economic powers rapidly escalated, posing a challenge to US corporations.
The president has told the US trade representative Robert Lighthizer to begin preparations for levies of 10 per cent, the administration said, as it set out a list of products that could be targeted. The list takes aim at multinationals that source materials and components from China including automotive parts, food ingredients and construction. Chinese products targeted also range from furniture and luggage, to inflatable vessels, bicycle parts and burglar alarms. If implemented, duties on such products would have a bigger impact on US consumers than did the tariffs imposed last week on $34bn of goods, which focused on manufacturing components.
After the announcement, China-focused stocks led a broad sell-off in Asia-Pacific equities and the renminbi slid. “For more than a year, the Trump administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” Mr Lighthizer said. “We have been very clear and detailed regarding the specific changes China should undertake. Unfortunately, China has not changed its behaviour — behaviour that puts the future of the US economy at risk.” China’s Ministry of Commerce responded on Wednesday that Beijing was “shocked” by Washington’s moves. The actions “were hurting China, hurting the entire world and hurting the US itself”, the ministry said. To date China has reacted relatively cautiously to US tariffs, targeting US farm and energy exports while cultivating allies among foreign businesses in Europe and elsewhere. Last week Beijing accused the US of “trade bullying” and slapped tariffs on $34bn of American exports — a move Mr Lighthizer said lacked “any international legal basis or justification”.
USTR will now begin a public notice and comment process running through July and August, before the imposition of the final tariffs. Mr Trump has told journalists he was ultimately willing to impose tariffs on all $500bn of the goods the US imports from China. US officials insist their country is well positioned economically to handle the trade war. Recent jobs numbers have remained robust, with the US adding 213,000 positions in June. But David French, senior vice-president for government relations from the National Retail Federation, said the measures would “boomerang back” to harm US families and workers. “Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise,” he said. “The retaliation that will follow will destroy thousands of US jobs and hurt farmers, local businesses and entire communities.” Minutes from the Federal Reserve’s June meeting reported that businesses were saying that tariffs had already caused companies to put some investments on hold or reduce them. Seventy of the top 100 exporters from China are foreign companies, putting them squarely in the crossfire, said Zhu Haibin, chief China economist at JPMorgan: “The impact, including to the US itself, will be much larger than Trump estimates.”
The president’s latest move was criticised by Orrin Hatch, the Republican senator who chairs the powerful finance committee. “Although I have supported the administration’s targeted efforts to combat China’s technology transfer regime, tonight’s announcement appears reckless and is not a targeted approach,” he said. Kevin Brady, the Texas Republican who chairs the House Ways and Means Committee, said that despite the rising economic risks there were no serious trade discussions between China and the US and no plans for talks soon. He urged Mr Trump to meet directly with Xi Jinping, Chinese president, to hammer out a solution. Mr Brady said: “With this announcement, it’s clear the escalating trade dispute with China will go one of two ways — a long, multi year trade war between the two largest economies in the world that engulfs more and more of the globe, or a deliberate decision by President Trump and President Xi to meet and begin crafting an agreement that levels the playing field between China and the US for local farmers, workers and businesses.”
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