Trump sets tariffs on $50 billion in
Chinese goods; Beijing strikes back
Send a link to a friend
[June 16, 2018]
By David Lawder and Ben Blanchard
WASHINGTON/BEIJING (Reuters) - U.S.
President Donald Trump said he was pushing ahead with hefty tariffs on
$50 billion of Chinese imports on Friday, and the smoldering trade war
between the world's two largest economies showed signs of igniting as
Beijing immediately vowed to respond in kind.
Trump laid out a list of more than 800 strategically important imports
from China that would be subject to a 25 percent tariff starting on July
6, including cars, the latest hardline stance on trade by a U.S.
president who has already been wrangling with allies.
China's Commerce Ministry said it would respond with tariffs "of the
same scale and strength" and that any previous trade deals with Trump
were "invalid." The official Xinhua news agency said China would impose
25 percent tariffs on 659 U.S. products, ranging from soybeans and autos
to seafood.
China's retaliation list was increased more than six-fold from a version
released in April, but the value was kept at $50 billion, as some
high-value items such as commercial aircraft were deleted.
Shares of Boeing Co <BA.N>, the single largest U.S. exporter to China,
closed down 1.3 percent after paring earlier losses. Caterpillar Inc
<CAT.N>, another big exporter to China, ended 2 percent lower.
Trump said in a statement that the United States would pursue additional
tariffs if China retaliates.
Washington and Beijing appeared increasingly headed toward open trade
conflict after several rounds of negotiations failed to resolve U.S.
complaints over Chinese industrial policies, lack of market access in
China and a $375 billion U.S. trade deficit.
"These tariffs are essential to preventing further unfair transfers of
American technology and intellectual property to China, which will
protect American jobs," Trump said.
Analysts, however, did not expect the U.S. tariffs to inflict a major
wound to China's economy and said the trade dispute likely would
continue to fester.
TVS SPARED, CHIPS ADDED
U.S. Customs and Border Protection will begin collecting tariffs on 818
product categories valued at $34 billion on July 6, the U.S. Trade
Representative's office said.
The list was slimmed down from a version unveiled in April, dropping
Chinese flat-panel television sets, medical breathing devices and oxygen
generators and air conditioning parts.
The tariffs will still target autos, including those imported by General
Motors Co <GM.N> and Volvo, owned by China's Geely Automobile Holdings
<0175.HK>, and electric cars.
And USTR added tariffs on another 284 product lines, valued at $16
billion, targeting semiconductors, a broad range of electronics and
plastics that it said benefited from China's industrial subsidy
programs, including the "Made in China 2025" plan, aimed at making China
more competitive in key technologies such as robotics and
semiconductors.
Tariffs on these products will go into effect after a public comment
period. A senior Trump administration official told reporters that
companies will be able to apply for exclusions for Chinese imports they
cannot source elsewhere.
Most semiconductor devices imported from China use chips produced in the
United States, with low-level assembly and testing work done in China,
prompting the Semiconductor Industry Association to call the new tariff
list "counterproductive."
While many business groups and lawmakers urged the two governments to
negotiate instead, there was little sign talks would resume soon.
[to top of second column]
|
Flags of U.S. and China are placed for a meeting between Secretary
of Agriculture Sonny Perdue and China's Minister of Agriculture Han
Changfu at the Ministry of Agriculture in Beijing, China June 30,
2017. REUTERS/Jason Lee/File Photo
Trump's tariffs did gain some support from an unlikely source, U.S.
Senate Democratic leader Charles Schumer, who called them "right on
target."
"China is our real trade enemy, and their theft of intellectual
property and their refusal to let our companies compete fairly
threatens millions of future American jobs," Schumer said in a
statement.
The USTR official said the tariffs were aimed at changing China's
behavior on its technology transfer policies and massive subsidies
to develop high-tech industries. The United States now dominates
those industries, but Chinese government support could make it
difficult for U.S. companies to compete.
Washington has completed a second list of possible tariffs on
another $100 billion in Chinese goods, in the expectation that China
will respond to the initial U.S. tariff list in kind, sources told
Reuters.
U.S. soybean futures plunged 1.5 percent to a one-year low on
concerns that an escalating trade fight with China will threaten
shipments to the biggest buyer of the oilseed, traders said.
Beijing and Washington had held three rounds of high-level talks
since early May but failed to reach a compromise. Trump was unmoved
by a Chinese offer to buy an additional $70 billion worth of U.S.
farm and energy products and other goods, according to people
familiar with the matter.
Analysts at Capital Economics said the impact of the tariffs on
China's economy would be small. Even if the U.S. duties reach the
full $150 billion, they estimated it would shave well under a
half-percentage point off China's annual growth rate, which could be
offset by fiscal and monetary policy actions.
"Neither side will be brought to its knees – which is one reason to
think the trade dispute could drag on," Capital Economics said. "For
China’s part, its leaders will be determined not to be seen to back
down to foreign pressure."
Although shares of some tariff-sensitive companies fell on Wall
Street, the stock market overall fell only modestly.
"With the announcement of the tariffs, there's a real risk that we
can see a continued increased escalation," said Robin Anderson,
senior economist at Principal Global Investors in Des Moines, Iowa.
But he said that underlying strong economic fundamentals in the
United States would dampen the market impact.
Trump has also triggered a trade fight with Canada, Mexico and the
European Union over steel and aluminum and has threatened to impose
duties on European cars.
While China in recent months made incremental market-opening reforms
in industries that critics in the foreign business community say
were already planned, it has not been inclined to yield on its core
industrial policies.
(GRAPHIC - Tit-for-tar tariffs interactive:
https://tmsnrt.rs/2GXE9qr)
(Reporting by David Lawder in Washington and Ben Blachard in
Beijing; Additional reporting by Stella Qiu in Beijing; Editing by
Jeffrey Benkoe and Leslie Adler)
[© 2018 Thomson Reuters. All rights
reserved.]
Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |