China’s Ministry of Commerce (MOFCOM) said Friday that China is planning to impose tariffs on 128 types of US imports, totaling an estimated three billion US dollars. This is just hours after US President Donald Trump signed a memorandum on Thursday that could impose tariffs on up to 60 billion US dollars worth of imports from China in a bid to rein in Chinese efforts to steal intellectual property from U.S. companies.
Trump said the new tariffs and penalties could total about $60 billion, while his own advisers said the figure would be closer to $50 billion.
The new measures focused on China are separate from the steep tariffs on steel and aluminum imports that Trump ordered earlier this month.
The tariffs are being enacted under what’s known as a Section 301 action, which grants the president the ability to correct what are seen as unfair practices among the US’s trade partners. In this case, US Trade Representative Robert Lighthizer said during the signing event, the focus was on the technology sector and the protection of intellectual property rights.
Lighthizer also said that the US would also be filing a World Trade Organization complaint against China.
The US has accused China of distorting global markets by allowing its companies — including state-owned giants — to steal intellectual property from American firms, a charge Beijing denies.
In a presidential proclamation Trump confirmed he would exclude six countries — Argentina, Australia, Brazil, Canada, Mexico and South Korea — and the European Union from the tariffs, until at least May 1.
In an event ahead of the signing of the tariffs, which reportedly will target $50 billion worth of Chinese goods, Trump said that he has a “great relationship” with Chinese President Xi Jinping, but the trade imbalance between the two countries warranted the US move
The curbs come in response to the country’s theft of US intellectual property, the administration says.
While those tariffs applied to imports from all nations, including China, the administration has moved to exempt several other countries from the measures.
US tariffs on Chinese goods may not be imposed until early June . A 60-day period for public consultation and comments on the tariff list can be expected, US Trade Representative Robert Lighthizer said. Lighthizer’s office is scheduled to publish a list of possible targeted products in 15 days – by April 6.
The Chinese measures include a 25 percent tariff on U.S. pork imports and 15 percent tariffs on steel pipes, fruit and wine, according to the report.The list published by the commerce ministry on Friday identifies steel, pipes, nuts, fruits, and wine which will be charged with a 15 percent tariff, while planning to add a 25 percent tariff on pork and scrap aluminum.
The list will be open to solicitation from business associations and local governments until March 31. The list of imports the US feared were going to be targeted by China – soybeans, cars and aircrafts – were not included on the list.
China said it is planning on taking legal action against the U.S. through the World Trade Organization.
These actions by the world two largest economies raises prospects of a global trade war.
After US President Donald Trump signed the memorandum on Thursday to hike tariffs on China’s steel and aluminum imports, the Dow Jones Industrial Average, the S&P, the Nasdaq Composite as well as other major industrials plunged, as the fear of trade war increased.
Industrial and technology companies, which depend heavily on foreign trade, took some of the worst losses. Boeing, Caterpillar and Microsoft all fell sharply. Bond prices surged as investors sought cover, sending yields lower.
The Dow Jones Industrial Average fell 723.45 points, or 2.93 per cent, to 23,958.86, the S&P 500 lost 68.23 points, or 2.52 per cent, to 2,643.7 and the Nasdaq Composite dropped 178.61 points, or 2.43 per cent, to 7,166.68.
Meanwhile, treasuries rose as investors shifted focus from the Federal Reserve to the threat of an escalating trade war with China that has the potential to disrupt global growth.
Chinese markets faced a severe drop, opening on Friday morning after the United States government raised tariffs against Chinese imports.
Hong Kong’s benchmark Hang Seng Index was down 3.67 percent, while the Shenzhen stock exchange saw the SZSE Component Index drop 3.42 percent. At the Shanghai stock exchange, the Shanghai Composite Index benchmark fell 3.07 percent to 3163.21 points.
Washington also launched Friday a challenge before the WTO’s Dispute Settlement Body (DSB) against China over intellectual property breaches.
The World Trade Organization, WTO, Director-General Roberto Azevedo warned states Friday that creating barriers to international trade would “jeopardize the global economy”.
“Disrupting trade flows will jeopardize the global economy at a time when economic recovery, though fragile, has been increasingly evident around the world,” Roberto Azevedo said in a statement, calling for “restraint and urgent dialogue.”
The WTO, which strives to foster a level-playing field in global trade, can through its Dispute Settlement Body, DSB, act as a court to resolve trade disputes.