U.S., China inch toward trade war after Trump calls for import tariffs
WASHINGTON — The world’s two biggest economies inched toward the brink of a trade war Friday after President Donald Trump announced a 25 percent tariff on up to $50 billion in Chinese imports to take effect July 6.
Beijing quickly responded that it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 U.S. exports, including farm products, autos and seafood, according to the Xinhua state news agency.
In announcing the U.S. tariffs, Mr. Trump said he was fulfilling a campaign pledge to crack down on what he contends are China’s unfair trade practices and its efforts to undermine U.S. technology and intellectual property.
“We have the great brain power in Silicon Valley, and China and others steal those secrets,” Mr. Trump said on “Fox & Friends.” ‘’We’re going to protect those secrets. Those are crown jewels for this country.”
The U.S. tariffs will cover 1,102 Chinese product lines worth about $50 billion a year. Included are 818 items, worth $34 billion a year, from a list of 1,333 the administration had released in April. After receiving public comment, the U.S. removed 515 product lines from the list, including TVs and some pharmaceuticals, according to a senior-administration official who briefed reporters on conditionof anonymity.
The administration is targeting an additional 284 Chinese products, which it says benefit from Beijing’s strong-armed industrial policies, worth $16 billion a year. But it won’t impose those tariffs until it gathers public comments. U.S. companies that rely on the targeted imports — and can’t find substitutes — can apply for exemptions from the tariffs.
The Trump administration has sought to protect consumers from a direct impact from the tariffs, which amount to a tax on imports. The tariffs target mainly Chinese industrial machinery, aerospace parts and communications technology, while sparing such consumer goods as smartphones, TVs, toys and clothes that Americans purchase by the truckload from China.
These tariffs will impose higher costs on U.S. companies that use the equipment. And over time, those costs could be passed on to consumers. But the impact won’t be as visible as it would be if consumer products were taxed directly.
By contrast, the Trump administration earlier this year imposed steep tariffs on imported washing machines. By May, the cost of laundry equipment had jumped 17 percent from two months earlier, according to government data.
The administration characterized the tariffs it announced Friday as entirely proper.
“It’s thorough, it’s moderate, it’s appropriate,” U.S. Trade Rep. Robert Lighthizer said on Fox Business Network’s “Mornings With Maria.”
Mr. Lighthizer added, “Our hope is that it doesn’t lead to a rash reaction from China.”
But Beijing’s Commerce Ministry retorted: “The Chinese side doesn’t want to fight a trade war, but facing the shortsightedness of the U.S. side, China has to fight back strongly. We will immediately introduce the same scale and equal taxation measures, and all economic and trade achievements reached by the two sides will be invalidated.”
A ministry statement gave no details of what U.S. goods would be hit by Beijing’s retaliatory tariffs. But China in April had announced possible targets, including light aircraft, orange juice, whiskey, beef and soybeans — an economically and politically important export from America’s heartland.
“The farmer can maybe look to their soybean associations for help to find other markets, but that doesn’t happen immediately,” said Dan Basse of AgResource, an agricultural research and advisory firm. “There’s not much the farmer can do right now.”
The longer-term concern, Mr. Basse said, is that China will increasingly look to Argentina and Brazil and that the United States will lose market share.