Trump Slaps Tariffs on $200 Billion in Chinese Goods
WASHINGTON – September 18, 2018
President Donald Trump escalated his trade war with China on Monday, imposing 10 percent tariffs on about $200 billion worth of Chinese imports.
Trump, in a statement announcing the new round of tariffs, warned that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
Collection of tariffs will start September 24 but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries, a senior administration official said.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure China to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. The Chinese side responded by maintaining tariffs on American goods for the same amount.
The escalation of Trump’s tariffs on China comes after talks between the world’s two largest economies to resolve their trade differences ended in nothing. The parties intend to continue negotiations. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.
“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly,” Trump said in his statement. “But, so far, China has been unwilling to change its practices.”
China has vowed to retaliate further against any new U.S. tariffs, officials, experts and state media are arguing for a tougher stance and calling to begin to beat on advancing.
The U.S. Trade Representative’s office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories, but administration officials said the total value of the revised list would still be “approximately $200 billion.”
A broad, $23 billion category of internet-connected devices will remain subject to tariffs, but some products, such as smart watches, Bluetooth devices, and other consumer-focused technology products were removed following a lengthy public vetting period during which more than 6,000 comments were received.
Also spared from the tariffs were Chinese inputs for U.S.-produced chemicals used in manufacturing, textiles and agriculture.
Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor (VSTO.N) and baby car seats and playpens from Graco Inc (GGG.N) also were taken off the list.
But the adjustments did little to appease technology and retail groups who argued that the tariffs would hit consumers hard.
The Retail Industry Leaders Association pointed out that the new tariffs would still hit more than $1 billion worth of gas grills from China, $843 million worth of luggage and travel bags, $825 million worth of mattresses, and $1.9 billion worth of vacuum cleaners.
“Tariffs are a tax on American families, period,” said Hun Quach,” RILA’s vice president for international trade. “Consumers – not China – will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen.”
Republican party U.S. 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 sooner President Xi and President Trump meet to craft a new trade path forward, the better,” said Representative Kevin Brady, chairman of the House Ways and Means Committee.
China's yuan currency CNY=CFXS has weakened by about 6.0 percent against the U.S. dollar since mid-June, offsetting the 10 percent tariff rate by a considerable margin.
Meanwhile, Trump shows no intention of stopping. He has declared that he is ready to wage tariff wars on all fronts.
“Tariffs have put the US in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed”,” wrote Trump in his twitter.
As a result, China, Canada, the European Union and other countries will have to respond. Over time, China's confidence in the ability of corporations to repay debts will decrease dramatically. Financial markets will collapse. World trade will fall by two-thirds. Global supply chains will falter. The world economy will begin to choke. Unfortunately, this negative scenario moves from the category of "unlikely" to the category of "expected".