Washington D.C., USA: U.S. President Donald Trump is looking to impose a 10 percent tariff on another $200 billion-worth of Chinese goods, after Beijing imposed reciprocal tariffs on US imports, according to a White House statement on Monday.
Trump cited Beijing’s decision to respond to US tariffs on $50 billion-worth of Chinese imports, imposed earlier:
“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” Trump said. “Rather than altering those practices, it is now threatening US companies, workers and farmers who have done nothing wrong.”
The new US tariff will be imposed if China goes ahead and implements its new tariff on American goods, announced last week, the White House said, adding that trade between the two countries “must be much more equitable.” China is currently running a $376 billion surplus in trade with the US, according to the White House.
If Beijing choses to continue its tit-for-tat tariff policy with the US, Washington will impose further tariffs on imports from China in addition to the $200 billion announced, the statement warned.
Responding to the news, the Chinese commerce ministry said Beijing will retaliate by imposing similar penalties on American goods, if Washington delivers on its threat.
“The United States has initiated a trade war and violated market regulations, and is harming the interests of not just the people of China and the US, but of the world,” the Chinese ministry said in a statement.
As late as May 20, US Treasury Secretary Steven Mnuchin was saying the trade war with China was “on hold” and that negotiations with Beijing were ongoing. Last week, however, the Trump administration announced tariffs on 1,102 separate categories of Chinese products, to go into effect on July 6.
China responded by setting a 25 percent tariff on 545 American products, worth $50 billion, in agriculture products, cars, and seafood. Another 114 product categories, including chemicals, medical equipment and energy industry products, will be “announced later,” the Chinese state news agency Xinhua reported.
Beijing has vowed to retaliate after US President Donald Trump said he would impose a 10-per-cent tariff on another 200 billion dollars worth of Chinese goods “if China refuses to change its practices.”
The Chinese Commerce Ministry accused the US of practising “extreme pressure and blackmail” and deviating from the “consensus reached by the two parties’ many consultations.”
The US had “disappointed the international community very much,” the ministry said. If the US became “irrational,” China would have to take strong and comprehensive countermeasures, it added.
“The United States initiated a trade war and violated market rules,” the ministry said. “China’s response is to safeguard the interests of the country and the people.”
Asian stocks tumbled after the dispute, with the Shanghai Composite Index falling by almost 3.78 per cent by the end of the trading session Tuesday, while Hong Kong’s Hang Seng’s Index fell by 2.78 per cent.
In a statement, Trump noted that the US had already announced plans for tariffs on 50 billion dollars worth of Chinese goods last week. Instead of caving to Washington’s demands, Beijing announced plans to retaliate with equivalent tariffs of its own.
Trump said he had therefore directed the US trade representative to identify an additional 200 billion dollars worth of Chinese goods for new tariffs and threatened more to come.
If all the tariffs are applied, they will affect roughly half of all Chinese imports to the US. Last year, the US imported a total of 505 billion dollars worth of Chinese goods, while China’s US imports were recorded at 130 billion dollars.
“These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” Trump said, according to a White House statement.
“If China increases its tariffs yet again, we will meet that action by pursuing additional tariffs on another 200 billion dollars of goods,” Trump said.
Last week the US said it was imposing tariffs on 50 billion dollars worth of Chinese goods, with 34 billion dollars worth coming into force on July 6 and the rest later.
Beijing immediately responded with an equivalent amount of tariffs on US goods also scheduled to begin coming into force next month.
China’s retaliatory tariffs were a clear indication of its “determination to keep the United States at a permanent and unfair disadvantage,” Trump said in his Monday statement.
“I have an excellent relationship with President Xi [Jinping], and we will continue working together on many issues. But the United States will no longer be taken advantage of on trade by China and other countries in the world,” Trump said.
“In light of China’s theft of intellectual property and technology and its other unfair trade practices, the United States will implement a 25 percent tariff on $50 billion of goods from China that contain industrially significant technologies. This includes goods related to China’s Made in China 2025 strategic plan to dominate the emerging high-technology industries that will drive future economic growth for China, but hurt economic growth for the United States and many other countries. The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.” Trump said
The US president called the move a clampdown on unfair trade practices by Beijing and warned that Washington would impose additional measures if the Chinese part retaliated.
China warned the White House Friday that it will respond “in the first instance” to protect its economy if President Trump moves forward with any tariffs on $50 billion worth of Chinese goods.
China will impose tariffs on some US products worth about $50 billion starting July 6, China’s State Council later said. The list includes a 25 per cent duty on 659 imported items including agricultural products, automobiles and aquatic products, according to a statement from the Ministry of Finance. It did not provide further details on the exact items. The tariffs on 34 billion worth of goods come into effect on July 6, the same day as US tariffs on China, with the additional 16 billion to be imposed later.
In April, the U.S. revealed an initial list targeting about 1,300 products worth $50 billion in Chinese imports. The U.S. is reportedly also nearing completion of a second list of products ordered by Trump, worth $100 billion, which would be subject to the same public hearing process as the first. That could bring a another wave of duties after 60 days or more.
Trump has made clear he has problems not only with China, which he accuses of stealing intellectual property and locking foreign companies out of its domestic markets, but also with key allies, including Canada and European nations.
The G7 summit in Quebec this month left the US at odds with the other six members over trade.
The US has imposed tariffs on the steel and aluminium exports of its closest allies, who have said they would impose measures in kind, with Washington also threatening the North American Free Trade Agreement with Canada and Mexico.
Market reaction to USA, China trade row
Copper futures fell more than 1% Tuesday as an escalating trade row between the U.S. and China rippled through most markets, among them the industrial metals impacted by trade pacts directly and those hit by the risks for an economic slowdown in these two global economic powerhouses.
In Comex futures trading, July copper HGN8, -1.66% fell 1.4% to $3.0635 a pound. If these losses hold, the contract will be down nearly 2.6% so far in this young week. On the London Metal Exchange, copper at one point hit a near three-week low at $6,838.50 a metric ton before improving.
July platinum PLN8, -1.01% edged down by 0.4% to $880.80 an ounce, while September palladium PAU8, -1.02% changed hands at $976.30 an ounce, down 0.7%.
Gold and silver, typically haven hiding places during market turmoil, were so far drawing limited demand tied to the China-U.S. tensions. August gold GCQ8, -0.34% edged higher Tuesday by 0.1% to $1,281.70 an ounce after booking the lowest settlement since December on Monday and producing a roughly 1.9% weekly decline on Friday. Stocks were hit by the trade developments and the U.S. dollar DXY, +0.48% moved higher.
Among other goods, iron and rebar are on the U.S. list of Chinese goods that are to be subjected to a 25% tariff beginning July 6.
In China, the most-active futures contracts for iron ore and steel have today fallen for a time by 5.5% and 3.5%, respectively, on Tuesday. Moves were accelerated in part because Chinese market reaction to the latest political developments were delayed because markets were closed Monday for a holiday.