China says it will retaliate after Trump imposes fresh tariffs

WASHINGTON/ TIANJIN, CHINA: China said yesterday it has no choice but to retaliate against new US trade tariffs, risking even stronger action from President Donald Trump in an escalation of the trade war between the world’s largest economies.

Beijing’s statement came hours after Trump imposed 10 per cent tariffs on about US$ 200 billion worth of imports from China, and threatened duties on about US$ 267 billion more if China hit back on the latest US action.

“To protect its legitimate rights and interests and order in international free trade, China is left with no choice but to retaliate simultaneously,” the commerce ministry said in a brief statement, without specifying what action it would take.

“The United States insists on increasing tariffs, bringing new uncertainties to bilateral trade negotiations. China hopes the United States would recognise the negative consequences of its actions, and take convincing steps to correct its behaviour in a timely manner.”

Trump had warned in a statement on Monday that if China takes retaliatory action against US farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately US$ 267 billion of additional imports.”

The latest US duties spared smart watches from Apple and Fitbit and other consumer products such as baby car seats.

But if the administration enacts the additional tariffs it would engulf all remaining US imports from China and Apple products like the iPhone and its competitors would not likely be spared.

Last month, China unveiled a proposed list of tariffs on US$ 60 billion of US goods ranging from liquefied natural gas to certain types of aircraft – should Washington activate the tariffs on its US$ 200 billion list.

China is reviewing plans to send a delegation to Washington for fresh talks in light of the US decision, the South China Morning Post reported yesterday, citing a government source in Beijing.

US trade actions against China will not work as China has ample fiscal and monetary policy tools to cope with the impact, a senior securities market official said.

“President Trump is a hardhitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations. I think that kind of tactic is not going to work with China,” Fang Xinghai, vicechairman of China’s securities regulator, said at a conference in the port city of Tianjin.

Collection of tariffs on the longanticipated US list will start on Sept 24 but the rate will increase to 25 per cent by the end of 2018, allowing US companies some time to adjust their supply chains to alternate countries.

So far, the United States has imposed tariffs on US$ 50 billion worth of Chinese products to pressure Beijing to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. China has retaliated in kind. Trump’s latest escalation of tariffs on China comes after several meetings yielded no progress.

US Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.

“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly,” Trump said.

“But, so far, China has been unwilling to change its practices.”

Fang told the Tianjin forum that he hopes the two sides can sit down and talk, but added that the latest US move has “poisoned” the atmosphere.

A senior Trump administration official told reporters that the United States was open to further talks with Beijing, but offered no immediate details on when they may occur.

“This is not an effort to constrain China, but this is an effort to work with China and say, ‘ It’s time you address these unfair trade practices that we’ve identified that others have identified and that have harmed the entire trading system,’” the official said.

So far, China has either imposed or proposed tariffs on US$ 110 billion of US goods, representing most of its imports of American products.

“Tensions in the global economic system have manifested themselves in the US- China trade war, which is now seriously disrupting global supply chains,” the European Union Chamber of Commerce in China said.

China’s yuan currency slipped 0.3 per cent against the US dollar in Asian trade yesterday.

It has weakened by about 6.0 per cent since mid- June, offsetting the 10 per cent tariff rate by a considerable margin.

The US Trade Representative’s office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories.

But the adjustments did little to appease technology and retail groups who argued US consumers would feel the pain.

“President Trump’s decision ... is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms. — Reuters