US to slap duties on US$16bil of China goods

List includes motorcycles, steam turbines and railway cars

WASHINGTON: The US said it will begin imposing 25% duties on an additional US$16bil in Chinese imports in two weeks, escalating a trade war between the world’s two biggest economies.

Customs will begin collecting the duties on 279 product lines, down from 284 items on the initial list, as of Aug 23, the US Trade Representative’s Office (USTR) said in an e-mailed statement. The new list covers products ranging from motorcycles to steam turbines and railway cars.

It will be the second time the US slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices. The US levied 25% duties on US$34bil in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing.

China has vowed to strike back again, dollar-for-dollar, on the US$16bil tranche.

The total could increase soon. The USTR is reviewing 10% tariffs on a further US$200bil in Chinese imports, and is even considering raising the rate to 25%. Those duties could be in place after a comment period ends on Sept 6.

President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than US$500bil last year.

A US-China trade war will reduce global output by 0.7% by 2020, with China’s economy taking a 1.3% hit and US GDP dropping 1%, Oxford Economics said in a research note Tuesday, before the new list was released.

While there’s no major risk of the world lapsing into “damaging stagflation”, the possibility remains of a “bigger blow-up” that sharply reduces trade, as in the 1930s, it said.

Still, there’s little sign the trade threat is hurting shipments just yet. Chinese data yesterday showed imports jumped and exports remained robust in July.

Among the products removed from the earlier list on US$16bil of imports were shipping containers, including those used by freight companies.

Schneider National Carriers Inc and other firms testified during a hearing July 24-25 in Washington that there are no US manufacturers and that the containers are almost exclusively made in China.

Also removed were splitting, slicing or paring machines. Joseph Cohen, chief executive officer of New Jersey-based Snow Joe LLC, which makes log splitters, had asked that they be taken off the list.

The final list did not remove tariffs on fertiliser distributors, which Jane Hardy, chief executive officer of Brinly-Hardy Co in Indiana, testified on July 24 could be the “nail in our coffin” for her firm after 179 years in business.

Over the weekend, Trump said he had the upper hand in the trade war, while Beijing responded through state media by saying it was ready to endure the economic fallout.

The US and China have been trying to restart high-level talks that broke off after Trump followed through on his tariff threats. Representatives of Treasury Secretary Steven Mnuchin and Chinese Vice-Premier Liu He are having private conversations as they look for ways to re-engage in negotiations, according to a source.

The two sides held three rounds of formal talks, beginning with a delegation to Beijing led by Mnuchin in May. After Liu visited Washington later that month, the nations released a joint statement pledging to reduce the US trade deficit with China, among other things. But within days, Trump backed away from the deal, saying talks would “probably have to use a different structure”.