USTR finalizes $200 billion in China tariffs

Jeannie Matthews
September 19, 2018

President Donald Trump escalated his trade war with China on Monday, imposing 10 per cent tariffs on about US$200 billion (S$275 billion) worth of Chinese imports. But Beijing has other ways to retaliate.

Such a move risks deepening the standoff, with President Donald Trump saying in a statement on Monday the USA would immediately pursue further tariffs on about $267bn of Chinese imports if Beijing retaliates.

The tariffs could create opportunities for Kiwi exporters, in both countries, Hwee Ang said.

The country's central bank, meanwhile, has allowed its currency to slide about 5 percent since January, giving Chinese exports an edge in overseas markets while making imports costlier.

"The new tariffs are bad news for the retail sector", said Neil Saunders, managing director at GlobalData Retail, a consulting firm.

USA officials said China had been given "chance after chance" to change the trade practices considered unfair to United States businesses, but has "remained obdurate".

If China retaliates, Trump threatened Monday to add a further $267 billion in Chinese imports to the target list.

Other signs of weakness in China's economy as the trade war escalates include cooling consumer spending, slowing infrastructure investment and a relatively low but growing rate of corporate bond defaults. "My administration will not remain idle when those interests are under attack", he said.

Additional tariffs on $267bn of imports from China would push the cumulative total beyond the amount of goods the U.S. bought from the Asian nation a year ago. The duties take effect September 24 at a 10 percent rate.

"If he puts tariffs on all Chinese exports to the United States - which he says he will - even in that scenario, the negative impact on China's economy is about 0.7 per cent", Fang said.

The phase-in was created to give US companies more time to adjust their supply chains, according to senior administration officials.

US stock markets opened higher and the Nasdaq index was up 1 over 1 percent by mid-morning.

U.S. to spare Apple watch, many gadgets from new China tariffs
However, some products that help computer networks operate, such as routers, will remain on the new list, the official said. Fang Xinghai, a senior Chinese regulator, voiced the possibility the new tariff will "poison" the trade talks.

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The White House has sought to pressure Beijing to reduce its trade surplus with the USA and protect intellectual property rights of American companies, which it says are abused in China. Business leaders are warning the high-stakes strategy could upend their supply chains and raise costs, as economists worry Trump's tactics could derail the broadest global upswing in years.

The move is aimed at pressuring China to change long-standing trade practices that Trump says are hurting U.S. businesses at a moment when the administration believes it has an advantage in the trade dispute.

Trump has also complained about America's gaping trade deficit - $336 billion previous year - with China, its biggest trading partner.

The administration earlier this month floated talks led by Mnuchin, with Liu He expected to lead the Beijing delegation.

U.S. business groups reacted angrily to the announcement, saying the tariffs would raise consumer prices and threaten jobs.

For its part China will retaliate with import levies on United States goods worth $60 billion. The US says the plans are based on stolen technology, violate China's market-opening commitments and might erode American industrial leadership.

Earlier Monday, White House economic adviser Larry Kudlow told the Economic Club of NY that the United States is "ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations towards free trade to reduce tariffs and non-tariff barriers, to open markets, to allow the most competitive economy in the world, ours, to export more and more goods and services to China".

"It is impossible to outsource rare earth elements in any other nation due to either the disseminated low-grade quality or strict regulatory statutes", the company said in a filing with the US Trade Representative.

But while the tariffs are aimed at hurting China, they could hamper the U.S. economy and bring pain for consumers.

Beijing has warned that it would hit an additional $60 billion in American goods if Trump ordered more tariffs.

Adding in the $200 billion list and another $267 billion of Chinese goods, total imports from China facing tariffs would exceed the $505 billion in goods that the United States imported from China a year ago. And in a victory for Apple Inc. and its American customers, the administration removed smart watches and some other consumer electronics products from the list of goods to be targeted by the new tariffs.

Trump threatened that nations that don't make "fair" deals withe USA with getting "Tariffed" on Monday morning prepared to slap the trade rival with the expected $200 billion in penalties.

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