Trump's tariffs on $200bn of Chinese imports kick in

Donald Trump has warned he could ramp up to "phase three," slapping tariffs on approximately $267-billion of additional imports, or the entirety of the goods the US buys from China.(Carlos Barria/Reuters)

Donald Trump has warned he could ramp up to "phase three," slapping tariffs on approximately $267-billion of additional imports, or the entirety of the goods the US buys from China.(Carlos Barria/Reuters)

Donald Trump’s threatened tariffs on another $200-billion of Chinese imports took effect on Monday, escalating a trade war between the world’s top two economies that is clouding the global outlook.

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.

Trump has hit 12% of total US imports this year alone.

Defiant in the face of increasing fears about the impact to the US economy, Trump has threatened to go after all imports from China if the country refuses to change policies he says harm US industry, particularly the theft of American technology.

“These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy,” he said in announcing the tariffs last week.

“We are going to win it,” his Secretary of State Mike Pompeo told Fox News on Sunday.

“We’re going to get an outcome which forces China to behave in a way that if you want to be a power — a global power — transparency, rule of law, you don’t steal intellectual property.”

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

China targeted 5 200 US goods with five to 10% tariffs, including big ticket items such as liquefied natural gas, lumber and electronics, as well as peppermint oil, pig hides and condoms.

It leaves Beijing hitting $110-billion worth of US goods, nearly everything China buys from the United States.

But Trump warned he could ramp up to “phase three,” slapping tariffs on approximately $267-billion of additional imports, or the entirety of the goods the US buys from China.

Dialogue between the world’s two biggest economies appears severed. Beijing cancelled the visit of a Chinese negotiating team expected September 27-28 in Washington, The Wall Street Journal said.

Previous talks in late August led to little progress.

In that context, the International Monetary Fund has warned about the potential for “significant economic costs,” including slower growth.

“Should the escalation go further, the economic costs for both countries and around the world will quickly add up,” IMF spokesman Gerry Rice said last week.

Fitch Ratings has cut its growth estimates for China and the world for 2019.

“Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook,” the agency said in a report Friday.

Hit list

The targeted Chinese imports will face 10% tariffs through the end of the year, and then the rate will jump to 25%.

A broad swath of products are on the hit list, including billions in Chinese-made voice data receivers, computer memory modules, automatic data processors, and accessories for office equipment such as copiers and banknote dispensers — instantly making widely used goods more expensive.

However, following complaints from thousands of US firms — including powerhouses like Apple and Walmart — 300 product lines were dropped from the target list.

The products spared also include smartwatches and Bluetooth devices, like the iPhone and Fitbit, child safety products such as high chairs, car seats and playpens, and certain health-and-safety products such as bicycle helmets, US officials said.

The removal of smartwatches and wireless headphones represents a win for Apple, just days after it unveiled its latest smartwatch and three new iPhones as part of a bid to fight back after slipping to third place among smartphone makers.

Walmart, the world’s biggest retailer, also warned of the “detrimental impact” to consumers if tariffs were imposed on a number of products, but many of those, like handbags, suitcases, haircare products, dog food and dog leashes, remained on the final list.

Beijing strikes back

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.

After accusing the US of launching the “largest trade war in economic history,” analysts worry Beijing could shift to threatened “qualitative” retaliatory measures, such as damaging US firms in China or restricting the export of crucial items to the US.

The spiralling trade fight adds to the growing areas of friction between the rival powers.

This week the US sanctioned a Chinese military procurement organisation, drawing a sharp protest from Beijing and a decision to postpone planned military talks.

The two are also at odds over Beijing’s wooing of Taiwan’s diplomatic allies, treatment of religious groups and claims to disputed islands in the South China Sea.

© Agence France-Presse

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Heather Scott
Ryan McMorrow

Ryan McMorrow

Ryan McMorrow was a China-based Fulbright Research Fellow. In his work documenting the lives of China’s peasant workers, he labored and lived in a Chinese foam factory, harvested wheat and planted rice on the plains of Henan, moved between construction sites, peddled fruit and ventured down into the coal-mines of Hunan. He has documented his stories on Chinadialogue.net, his well-received blog, amigrantslife.com and is now working on sharing the stories with a wider audience. Prior to starting the Fulbright Scholarship, he spent two years in Northern China living with local Chinese learning Mandarin. In 2011, he graduated from UCLA with a dual degree in East Asian Studies and Political Science.
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