China vows ‘firm, forceful’ reply to new U.S. tariffs

BEIJING China’s government vowed Wednesday to take “firm and forceful measures” as the U.S. threatened to expand tariffs to thousands of Chinese imports like fish sticks, apples and French doors, the latest salvo in an escalating trade dispute that threatens to chill global economic growth.

China gave no details, but it has plenty of options to retaliate that could extend beyond additional tariffs on U.S. imports.

There are fears that Beijing could attempt to disrupt operations of American automakers, retailers and others that see China as a key market.

The spiralling conflict stems from Washington’s complaint that Beijing steals or pressures companies to hand over technology and concerns that plans for state-led development of Chinese champions in robots and other fields might erode American industrial leadership.

A possible second round of tariff hikes announced Tuesday by the U.S. Trade Representative targets a US$200-billion list of Chinese goods.

That came four days after Washington added 25 per cent duties on US$34 billion worth of Chinese goods and Beijing responded by increasing taxes on the same amount of American imports.

The abrupt escalation is “totally unacceptable,” said a Commerce Ministry statement. It said Beijing would take unspecified “necessary countermeasures” to protect its “core interests.”

Asked what Beijing would do, foreign ministry spokeswoman Hua Chunying gave no details but said, “We will take firm and forceful measures.”

The USTR, the federal agency that oversees international trade policy and negotiations, said it was responding to Beijing ’s decision to retaliate instead of changing its policies.

President Donald Trump has threatened higher tariffs on more than US$500 billion of goods, or nearly all of China’s annual exports to the United States.

The USTR will accept public comments on the latest round of tariffs and hold hearings Aug. 2023 before reaching a decision after Aug. 31, according to a senior U.S. official who briefed reporters on condition of anonymity.

The first U.S. tariff list focused on Chinese industrial products, an attempt to reduce the direct impact on American consumers.

The new list includes vacuum cleaners, furniture, auto and bicycle parts, French doors and plywood. It left untouched U.S. branded smartphones and laptop computers.

That “will hit the Chinese export sector hard,” said Rajiv Biswas of IHS Markit in a report.

China bought US$130 billion of U.S. goods last year. Both governments have raised tariffs on US$34 billion worth of each other’s goods and already said they are considering additional charges on another US$16 billion. That would leave China only US$80 billion for further retaliation.

Instead, Beijing has other ways to disrupt American companies’ operations. Regulators can deny or cancel licences or launch lengthy tax, environmental or anti-monopoly investigations.