Tariffs on China imports start Aug 23

USTR releases final list that targets 279 product lines worth $16 billion

The Trump administration has decided to collect 25 percent tariffs on an additional $16 billion in Chinese imports starting on Aug 23, a move that is expected to be matched in kind from Beijing.

The Office of the US Trade Representative on Tuesday released a final tariff list targeting 279 product lines from China.

Only five product items were deleted from what the USTR initially proposed on June 15. Semiconductors, among the largest categories, remain on the list.

Other products that will be subject to the hefty duties include electronic integrated circuits, motorcycles, railway and farm equipment.

Tuesday’s list followed the first round of additional tariffs on $34 billion of Chinese goods, which took effect on July 6. The latest list brings the total Chinese imports subject to a 25 percent tariff to about $50 billion.

China has pledged to reciprocate the US tariff moves with duties on an equivalent value of US products.

In addition to levying additional tariffs on $34 billion of US products on July 6, Beijing announced a plan on June 16 for a second batch of tariffs, targeting an additional $16 billion of US goods, if the US list goes ahead. Those products include chemicals, coal, crude oil and medical devices.

Overall, 98 percent of the June 15 list of Chinese products are intermediate inputs and capital equipment, according to analysis by the Peterson Institute of International Economics.

The Washington think tank said that semiconductors are found in consumer products used in everyday life such as televisions, personal computers, smartphones and automobiles.

John Neuffer, president of the US Semiconductor Industry Association, expressed disappointment at the USTR decision to keep the sector on the tariff list, saying in a statement that tariffs imposed on semiconductors imported from China “will hurt America’s chipmakers”, according to a Reuters report.

“The inclusion of semiconductors is commensurate with the statements of officials who wish to target Chinese value-added industries,” said Douglas H. Paal, vicepresident of the Asia Program at the Carnegie Endowment for International Peace.

“US companies and consumers will pay more for inputs and products,” Paal told China Daily.

Paal said the world’s top two economies are in a trade war until Beijing blinks or Trump loses “political interest in pursuing this topic”.

“Right now, he seems to think this trade deficit dispute and immigration are issues that will help him with voters,” Paal said, referring to the November midterm elections.

“If he were to achieve an agreement with China, for example, he would then have to defend the agreement to voters, a much less pleasing prospect for this politician,” Paal said.

Gary Hufbauer, a nonresident senior fellow of the PIIE, said the USTR simply doesn’t mind hurting major US firms that rely on Chinese semiconductors.

“USTR will say that these firms are profitable and can absorb the tariffs and not raise prices,” Hufbauer said.

Jon Taylor, a professor of political science of the University of St. Thomas in Houston, said the tariffs imposed on Tuesday will only serve to place US companies at a greater disadvantage rather than forcing China to change its behavior.

“Simply put, the longer that Trump’s counterproductive trade war continues, the greater the negative impact on the US, as well as on China and the world,” Taylor said.