USA to impose $16 billion import tariffs on China

Frederick Owens
August 8, 2018

A spokesman for the commerce ministry described the latest round of US tariffs as "very unreasonable". Chinese data on Wednesday showed exports to the U.S. rose 13.3% in July to $41.5 billion against a year ago.

This is the first release of export numbers since tariffs went into effect on July 6.

On Tuesday, the Trump administration said it would begin collecting previously announced 25% tariffs on an additional $16bn of Chinese goods from 23 August.

"[The] trade data don't show any significant impact from the first round of United States tariffs", Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note to investors.

Talks between the two countries on the issues have failed to produce an agreement, prompting China to retaliate with tariffs of its own and US President Donald Trump to escalate his threats. And President Donald Trump has threatened to impose tariffs on virtually everything China sells to the United States.

On Tuesday, the administration said it had chose to go ahead with tariffs on 279 of the 284 items added in June; they're worth about $16 billion a year. China's exports to the United States fell by 2.5 percent to $41.5 billion month-on-month, while imports of U.S. goods plunged 1.5 percent to $13.4 billion, according to data from General Administration of Customs on Wednesday, as quoted by the media.

Although the move was expected, it solidifies the view that there appears to be no effort underway to defuse the dispute between the world's two largest economies.

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The government has responded by releasing more liquidity into the banking system, encouraging lending and promising a more "active" fiscal policy. That was off slightly from June's 13.6% rate but still stronger than China's global export growth. Washington has long criticised China's trade surplus with the United States and has demanded Beijing cut it.

The Trump administration has maintained that the tariffs are necessary to force China into changing economic behavior it says harms the US.

The trade balance between the two countries, which is at the center of the tariffs tussle, continued to be in favor of China.

Of more direct outcome in the Sino-U.S. trade war, China's surplus with the United States shrank only marginally to $28.09 billion last month from a record $28.97 billion in June.

China's exports surged more than expected in July despite fresh USA duties and its closely watched surplus with the United States remained near record highs, as Washington finalised its new tariff list in a bitter dispute that some fear could derail global growth.

This latest round makes good on the president's promise in June to impose a 25% tariff on $50 billion in Chinese goods.

Several large American companies have said they would adjust their supply chains to source outside of China if tariffs on Chinese goods impacted them, while China's Haier Group (1169.HK) said rising steel prices amid hefty US import tariffs was driving up costs for its business in America.

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