China tariff pitch hits back at U.S.
$50B in beans, cars, chemicals in plan
China hit back at the United States on Wednesday with proposed tariffs on $50 billion worth of U.S. soybeans, cars, chemicals and other goods, in a move likely to stoke fears that the countries’ escalating confrontation could become an all-out trade war.
Chinese officials outlined plans to make it more costly to import 106 types of U.S. goods into China. They are intended to hit the United States square in the farm belt — a major supplier of what China stocks in its supermarkets.
China’s plan to institute new tariffs was announced just hours after the Trump
administration detailed its own protections on a similar value of Chinese-made aircraft parts, cars and car parts, televisions, steel and much more.
“China has never succumbed to external pressure,” Zhu Guangyao, vice minister of finance, said at a news briefing Wednesday. He added, “External pressure will only make the Chinese people more focused on economic development.”
The question now is whether the two sides will intensify their efforts to punish each other before they sit down to negotiate. Neither set of tariffs go into effect right away, though the exact timing of the Chinese measures was not clear.
Stocks rose Wednesday in a roller-coaster trading session during which investors were whipsawed by updates on the escalating trade dispute. The Dow Jones industrial average plunged 501 points after the opening bell but recovered the losses and ended in positive territory, rising 230.94 points, or 1 percent, to 24,264.30.
The Trump administration indicated it is willing to negotiate with China, helping to ease fears among investors.
U.S. Commerce Secretary Wilbur Ross said China’s response isn’t expected to disrupt the U.S. economy. In an interview on CNBC on Wednesday, he said China’s reaction “shouldn’t surprise anyone.” He said the U.S. isn’t entering “World War III” and left the door open for a negotiated solution.
“Even shooting wars end with negotiations,” Ross said.
President Donald Trump also downplayed the prospect of a trade war, saying on Twitter on Wednesday morning that “we are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”
China’s proposed new tariffs cover a significant chunk of what it buys from the United States. The protections on the $50 billion of goods announced Wednesday, together with those on the $3 billion worth of products that China unveiled earlier this week in retaliation for U.S. tariffs on global steel imports, account
for about a third of China’s U.S. imports.
By contrast, because the United States imports significantly more from China, tariffs on the same amount of products make up roughly oneninth of its Chinese imports. That gives the United States more room to find other Chinese products to target.
The American Soybean Association, a lobbying group that says it represents 21,000 U.S. soybean producers, said China’s proposed 25 percent tariff on soybeans would be “devastating” to U.S. farmers. China is the largest consumer of U.S. soybeans, buying about one-third of all U.S. soybean production each year, the group said.
Association President John Heisdorffer, an Iowa farmer, is calling on the Trump administration to withdraw its proposed tariffs and meet with soybean farmers to discuss ways to improve competitiveness without resorting to tariffs.
The association says soybean farmers lost an estimated $1.72 billion on Wednesday morning alone as soybean futures tumbled.
“That’s real money lost for farmers, and it is entirely preventable,” Heisdorffer said in a statement.
In Arkansas, Robert Stobaugh is nearly ready for planting on the 6,000 acres he farms with his brother and nephew in Conway and Pope counties — with about two-thirds devoted to soybeans and the rest to corn and rice. After harvest, most of the oilseed in his area is loaded on barges for New Orleans export terminals, with China as a likely buyer.
“We can negotiate all day long, so long as by the time these crops come off the field, we aren’t selling into a further depressed market,” he said Wednesday. “Those things are so far out of our hands as producers that it makes us feel extremely vulnerable.”
Chris Gould, who grows soybeans and grains near Maple Park, Ill., said he had been optimistic about modest profits from this year’s crop.
As Chicago soybean futures fell as much as 5.3 percent Wednesday, Gould expressed concern that an extended decline could wipe out expected returns for this season. He also said he’s worried that tariffs will mean China ends up building stronger trade relationships with Brazil and Argentina, which could reduce imports from the U.S. in the long term.
Ford and General Motors on Wednesday called for continued dialogue to resolve trade tensions.
Both automakers issued statements Wednesday after China proposed steep retaliatory tariffs on imports of U.S.-made vehicles and other goods.
Ford says it encouraged the governments to work together. GM urges the countries to “engage in constructive dialogue and pursue sustainable trade policies.”
GM would be affected by U.S. tariffs because it imports the Buick Envision SUV from China. Ford has plans to import a new version of the Focus compact car from China next year. Both make most of their vehicles in China that are sold there and ship only a small number of vehicles from the U.S. to China.
Boeing shares sank Wednesday. China is a key market for Boeing, accounting for nearly one-fourth of the Chicago company’s deliveries of commercial airplanes last year.
Chinese tariffs on U.S.made planes are not certain, and the proposal only covers planes within a certain weight range. Analysts say the tariffs would hit older versions of the Boeing 737 that are still in production, but not newer MAX models. Larger wide-body aircraft would not be affected.
Still, the threat that Boeing Co. could be caught in trade war crossfire sent the shares down nearly 6 percent in morning trading. They regained some ground by late morning. The shares fell $3.38, or 1 percent, to close at $327.44.
National Economic Council Director Larry Kudlow suggested Wednesday that the proposed tariffs on Chinese imports may not ultimately go into effect.
Kudlow said the tariffs on Chinese products announced Tuesday by the United States are “potentially” a negotiating ploy in an effort to get China to level the playing field for U.S. businesses.
“There are carrots and sticks in life,” Kudlow said, adding that the U.S. is encouraging China to lower trade barriers.
He said China should take President Trump “seriously” on tariffs, but that ultimately the president is a “free-trader.”
Kudlow said the Trump administration is focused on growing the U.S. economy.
“Sometimes the path to this kind of growth is a little rocky,” he said. “That’s the way the world works.” Information for this article was contributed by Keith Bradsher and Steven Lee Myers of The New York Times, Joe McDonald and Paul Wiseman of The Associated Press and Shruti Date Singh, Megan Durisin and Andrew Mayeda of Bloomberg News.