China will hit back at any new U.S. tariffs: ministry

Gladys Abbott
September 18, 2018

Kudlow, speaking at the Economic Club of NY, also said China's economic reforms were moving in the wrong direction and that he expected the United States would soon announce tariffs on an additional US$200 billion worth of Chinese goods.

Trump started out in July and August with a more modest $50 billion round of tariffs targeting aircraft parts, computer hard drives, machinery and appliances, optical and surgical equipment as well as autos - goods Washington said had benefited from unfair trade practices.

The Trump administration has demanded that China cut its $375 billion trade surplus with the United States, end policies aimed at acquiring USA technologies and intellectual property and roll back high-tech industrial subsidies.

China retaliated against the first round of tariffs in kind, hitting American soybeans among other goods.

Washington, Europe and other trading partners say those plans violate China's market-opening commitments.

Collection of 10 per cent tariffs will start on September 24 but the rate will increase to 25 per cent by the end of the year, allowing United States companies some time to adjust their supply chains to other countries, a senior administration official said. Still, American consumers could start feeling the cost in everyday goods, as the latest move brings all Chinese imports subject to a new tariff to US$250 billion, roughly half of China's shipments to the USA previous year.

A government collects tariffs as a form of import tax.

If all of Trump's planned tariffs are applied, Monday's levies, plus the existing $50 billion and planned $260 billion in tariffed goods would cover and exceed all of the US' imports from China, a staggering $506 billion.

The administration's proposal for the tariffs on US$200 billion (S$247 billion) of products drew protest from technology companies earlier this year, but the final list of taxed devices described by the official avoids many big consumer brand names and products.

If the administration pursues what it calls "phase three" of the tariff strategy, it would raise the total value of affected Chinese goods to $517 billion - covering almost everything China sells the United States. He did not say whether he was referring to the impact on the amount of GDP or the GDP growth.

If he does go ahead with a further $267bn worth of tariffs, it would mean virtually all of China's U.S. exports would be subject to new duties.

Treasury Secretary Steven Mnuchin had invited the negotiators to Washington this week to resume talks.

The Trump administration says its aggressive stance is to pressure Beijing to change policies that allow for the theft of USA technology and undercut American producers.

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"But, so far, China has been unwilling to change its practices", he said. US Trade Representatives (USTR) released a list of such items.

Trump told reporters earlier on Monday his impression is that Beijing wants to talk about a deal, and that he thinks "it's going to work out very well with China".

"For months, we have urged China to change these unfair practices and give fair and reciprocal treatment to American companies", Trump said in a statement.

President Trump defended his mercantilist policy on Monday, tweeting that "Tariffs have put the United States in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been nearly unnoticeable".

Republican party USA lawmakers urged the Trump administration to pursue negotiations with China to resolve trade differences, while applauding Trump's tough stance on Chinese intellectual property and trade practices.

The US-China trade war could have some impact on the prices Kiwi pay for goods due to the interconnected nature of global supply chains, an expert warns.

China's yuan currency slipped 0.3 percent against the US dollar in Asian trade on Tuesday.

Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor and baby vehicle seats and other products from Graco Inc also were taken off the list. Japan has informed the WTO that it plans to impose retaliatory measures on USA goods to the tune of 50 billion yen (US$455 million).

Trump's decision is a significant escalation of an already serious trade dispute between the world's two largest economies - one with seemingly no end in sight.

But the adjustments did little to appease technology and retail groups who argued US consumers would feel the pain.

"Tariffs are a tax on American families, period", said Hun Quach", RILA's vice president for global trade.

"It appears that the administration responded to some industry concerns, but for many American businesses and consumers this still represents a rapid acceleration of costs and much higher uncertainty", said Rufus Yerxa, president of the National Foreign Trade Council.

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