New tariffs on China take effect today

Cornelia Mascio
Settembre 25, 2018

The latest volley against Beijing brings the amount of goods hit by duties to more than $250 billion, covering roughly half of Chinese exports to the United States, with American consumers set to increasingly feel the pain directly in their wallets.

The United States and China imposed fresh tariffs on each other's goods Monday as the world's two largest economies showed no sign of backing down from a bitter trade dispute that kept rattling financial markets.

Beijing's retaliatory tariffs on $60 billion in American goods were set to go into effect soon after, the finance ministry announced last week.

"The door for trade talks is always open but negotiations must be held in an environment of mutual respect", according to a white paper carried by the state-run Xinhua News Agency.

If the president follows through on the escalation threat, U.S. tariffs would cover all goods the nation imported from China past year, risking an escalating conflict that could upend the supply chains of multinational companies.

China exports far more goods to the US than it imports, which means it has fewer options to slap retributive tariffs on.

The report by the Chinese government said: "It has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China".

President Trump, who has accused Beijing of exploiting the United States on trade, wants to reduce China's $375.6 billion goods trade surplus with America.

China has made "enormous efforts" to stabilise bilateral economic and trade relations by holding discussions and proposing practical solutions, but the USA has been contradicting itself and constantly challenging China, reported Xinhua.

The trade tensions have also cast a pall over broader relations between Beijing and Washington, with the two sides butting heads on a growing number of issues.

Envoys last met August 22 in Washington but reported no progress.

This week the U.S. sanctioned a Chinese military procurement organisation, drawing a sharp protest from Beijing and a decision to postpone planned military talks. The Chinese tariff, though smaller than the duty Beijing threatened to levy earlier this year, makes USA gas a bit more expensive and less competitive in the world's second-largest LNG market.

"It would look weak both to the U.S. and at home", he said, adding that there is "sufficient stimulus in the pipeline" to limit the damage of the latest tariffs on China's growth.

China outlined a matching bump in tariff rates for the targeted $60 billion of goods, but it is running out of targets to even the score on Trump's threatened third tariff wave. A protracted trade war will fuel inflation in the USA, particularly as tariffs are added to categories such as furniture, apparel and technology, according to analysts at Bloomberg Intelligence. Instead, it has warned of "qualitative" measures to retaliate. Business groups say American companies also report Chinese regulators are starting to disrupt their operations through slower customs clearance and more environmental and other inspections. Some analysts say there is also a risk that China could allow its currency to weaken again to cushion the blow to its exporters.

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