China hits back with fresh tariffs on $60 bn of US goods
BEIJING: Deepening its trade battle with the US and sending financial markets spinning, China announced tariff hikes on Monday on $60 billion of American goods in retaliation for US President Donald Trump’s latest penalties on Chinese products.
Punitive charges of 5% to 25% on thousands of American products including batteries, spinach and coffee will take effect June 1, the finance ministry said. That extends Chinese duty increases to $110 billion of imports from the US.
The announcement followed an increase of US duties on $200 billion of Chinese imports to 25% from 10% in the increasingly bitter dispute. American officials have accused China of backtracking on commitments they say it made in earlier negotiations. On Twitter, Trump warned Chinese President Xi Jinping his country “will be hurt very badly” if it doesn’t agree to a trade deal. Trump tweeted China “had a great deal, almost completed, & you backed out!”
The President insisted increases on Chinese goods don’t hurt American consumers, saying there is “no reason for the US Consumer to pay the Tariffs.”
White House economic adviser Larry Kudlow acknowledged on Sunday that US consumers and businesses do pay the tariffs. “Both sides will pay,” he told Fox News.
China had vowed “necessary countermeasures” on Friday against Trump’s escalation.
Frazzled by the uncertainty, shares sank on Monday across the globe. The Dow Jones Industrial Average lost 622.10 points or 2.4%, while the Standard & Poor’s 500 sank 2.5% in early trading. China’s announcement on Monday said tariff increases are going ahead based on a list of $60 billion of US goods Beijing
PUNITIVE CHARGES OF 5% TO 25% ON THOUSANDS OF AMERICAN PRODUCTS WILL TAKE EFFECT FROM JUNE 1
released in August. That list was issued in response to Trump’s threat to raise tariffs on $200 billion of Chinese goods to 25% from 10%. Beijing said then it wouldn’t take action until the US increases took effect, which finally happened on Friday.
A 25% tariff applies to 2,493 items including industrial chemicals, electronic equipment, precision machinery and hundreds of food products, according to the finance ministry. A 20% penalty applies to 1,078 items, 10% to 974 items and 5% to 662 items.
Beijing is running out of US imports for penalties due to the lopsided trade balance between the world’s two largest economies. Regulators have targeted American companies in China by slowing down customs clearance for shipments and processing of business licenses.
The new tariffs are likely to hurt exporters on both sides, as well as European and Asian companies that trade between the US and China or supply components and raw materials to their manufacturers.
The increases already in place have disrupted trade in goods from soybeans to medical equipment and sent shockwaves through other Asian economies that supply Chinese factories.
Forecasters have warned that the US tariff hikes could set back a Chinese recovery that had appeared to be gaining traction. Growth in the world’s secondlargest economy held steady at 6.4% over a year earlier in January-march, supported by higher government spending and bank lending. The tensions “raise fresh doubts about this recovery path,” said Morgan Stanley economists Robin Xing, Jenny Zheng and Zhipeng Cai in a report.
The latest US charges could knock 0.5 percentage points off annual Chinese economic growth and that loss could widen to 1 percentage point if both sides extend penalties to all of each other’s exports, economists say. That would pull annual growth below 6%, raising the risk of politically dangerous job losses.