U.S. escalates China trade showdown with tariffs on $50 billion in imports

WASHINGTON, (Reuters) - The Trump administration yesterday raised the stakes in a growing trade showdown with China, targeting 25 percent tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices.

The U.S. tariff unveiling, representing about $50 billion of estimated 2018 imports and aimed at dealing a setback to China’s efforts to upgrade its manufacturing base, drew an immediate condemnation from Beijing, along with a threat of retaliatory action.

China’s Ministry of Commerce said it “will soon take measure of equal intensity and scale against U.S. goods.”

“We have the confidence and ability to respond to any protectionist measures by the United States,” the ministry said in a statement quoted by the official Xinhua news agency.

The ministry did not reveal any specific countermeasures, but economists widely view imports of U.S. soybeans, aircraft and machinery as prime targets for trade retaliation.

The tariff list from the U.S. Trade Representative’s office followed China’s imposition of tariffs on $3 billion worth of U.S. fruits, nuts, pork and wine to protest new U.S. steel and aluminum tariffs imposed last month by U.S. President Donald Trump.

The standoff between the world’s two largest economies has sparked market fears that they could spiral into a trade war that could crush global growth.

Asian share markets were mixed amid trade tension concerns, with Japan’s Nikkei 225 off 0.1 percent but Shanghai’s main index poised to open 0.3 percent higher.

The USTR list ranged from chemicals to lightemitting diodes to machine parts, but U.S. industry groups warned it would still hit supply chains that rely on Chinese components and would ultimately raise costs for consumers.

Many consumer electronics products such as cellphones made by Apple Inc. and laptops made by Dell were excluded, as were footwear and clothing, drawing a sigh of relief from retailers who had feared higher costs for American consumers.

But the USTR did include some key consumer products from China, including flat-panel television sets and motor vehicles, both electric and gasoline-powered with engines of 3 liters or less.

A Reuters analysis that compared listed products with 2017 Census Bureau import data showed $3.9 billion in flat-panel television imports, and $1.4 billion in vehicle imports from China.

Among vehicles likely to be hit with tariffs is General Motors Co’s Buick Envision sport-utility vehicle, which is assembled in China and sold in the United States. Volvo, owned by China’s Geely Motors, also exports Chinese-built vehicles to the United States.

More than 200 products on the list saw no U.S. imports last year, including large aircraft and communication satellites, while some categories were highly unlikely to ever be imported, such as artillery weapons.

Publication of the tariff lists starts a public comment and consultation period expected to last around two months, after which USTR said it would issue a “final determination” on the product list. It has scheduled a May 15 public hearing on the tariffs.

China ran a $375 billion goods trade surplus with the United States in 2017, a figure that Trump has demanded be cut by $100 billion.

USTR developed the tariff targets using a computer algorithm designed to choose products that would inflict maximum pain on Chinese exporters, but limit the damage to U.S. consumers.

A USTR official said the product list got an initial scrub by removing products identified as likely to cause disruptions to the U.S. economy and those that needed to be excluded for legal reasons.

“The remaining products were ranked according to the likely impact on U.S.

consumers, based on available trade data involving alternative country sources for each product,” the official, who spoke on condition of anonymity, told Reuters.

USTR said the China tariffs announced yesterday were proposed “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.”

The agency added that such policies “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans.”

China has denied that its laws require technology transfers and has threatened to retaliate against any U.S. tariffs with trade sanctions of its own, with potential targets such as U.S. soybeans, aircraft or heavy equipment.