China Retaliates for $200 Billion in US Tariffs

Donald Trump

Trump announced on Monday that his administration would impose 10 per cent tariffs on US$200 billion of Chinese goods, effective next Monday, a move seen as likely killing any chance of further negotiations taking place.

The increases are in response to the US announcing it will impose tariffs on $200 billion worth of Chinese-made goods starting next week.

Trump's comments came a day after he targeted another $200 billion in Chinese imports with tariffs starting next week, drawing an immediate vow of retaliation from Beijing.

China will impose a 10 percent tariff on US products it previously designated for a rate of 20 and 25 percent.

Trump threatened to hit another $267 billion in Chinese goods if Beijing took retaliatory action. While consumer electronic products were generally removed, network and router items will be covered by the tariffs, senior administration officials said on a call with reporters Monday.

The White House on Monday did remove about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals, bicycle helmets and high chairs. That doesn't quite compare to the $200 billion targeted by USA tariffs, but it shows that if the Trump administration wants a trade war, China's willing to get its hands dirty as well. The widely voiced view among professional investors has been that the escalation of tariffs and tough trade rhetoric have been tactics aimed ultimately at lowering unfair trade barriers and protecting USA intellectual property.

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 USA companies some time to adjust their supply chains to other countries, a senior administration official said.

China said Tuesday it had no other choice than to retaliate because the United States has created "new uncertainty" between the two countries.

China's Foreign Ministry reiterated that the escalation of the trade conflict was not in anyone's interest. Beijing is still ready to negotiate an end to the trade tensions, it said.

Apple had said the USA tariffs would affect prices for a "wide range" of Apple products, including its Watch, in a letter commenting on administration proposals earlier this month. Solid pluralities of registered voters in Illinois, Indiana, Missouri, Pennsylvania, Tennessee and Texas said tariffs will do more to increase costs of products and harm the economy.

Trump said China had refused to change the unfair practices that hurt United States businesses and workers.

He said that what the United States is doing now is "economic madness" that risks creating a vicious cycle for business that could have an impact in China and elsewhere.

The new tariff measures will take effect at 12.01pm local time on September 24.

The United States is expected to pull the trigger this week on a full-blown trade war with China, as the Trump administration prepares to unveil a fresh round of tariffs targeting about $US200 billion in Chinese goods. The U.S. levy is slated to rise to 25% at the end of the year.

Repeating that threat in the Oval Office on Tuesday afternoon, Trump said: "We don't want to do it, but we probably will have no choice".

A senior Trump administration official told reporters that the USA was open to further talks with Beijing, but offered no immediate details on when they may occur.

But that doesn't mean China won't respond to the Trump administration's tariffs.

"But, so far, China has been unwilling to change its practices", including theft and forced transfer of technology.

Trump had urged his advisers to press forward with the $200 billion round, even as Washington and Beijing worked to restart trade talks.

China isn't paying the tariffs, however - the duties are paid by importers like Ford or Walmart that either swallow the cost or pass it along to consumers.

Trump seems aware of the dangers, as China has retaliated against crops and other American products made in parts of the country that supported the president.



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