China pledges to match tar­iffs on $16bn of Amer­i­can goods

Irish Independent - Business Week - - Front Page - Miao Han

CHINA said it will be­gin im­pos­ing 25pc du­ties on an ad­di­tional $16bn (€13.8bn) of Amer­i­can goods im­me­di­ately af­ter US levies take ef­fect, mak­ing good on its pledge to re­tal­i­ate in kind.

Cus­toms will be­gin col­lect­ing the du­ties on the prod­ucts from 12.01am on Au­gust 23, the Min­istry of Fi­nance said in a state­ment on its web­site yes­ter­day.

The US an­nounced ear­lier this week that its own tar­iffs on $16bn of Chi­nese goods would start that day. The Chi­nese list cov­ers coal, oil, chem­i­cals and some med­i­cal equip­ment.

The US levied 25pc du­ties on $34bn in Chi­nese goods on July 6, prompt­ing swift in-kind re­tal­i­a­tion from Beijing.

That to­tal could soon in­crease. The US Trade Rep­re­sen­ta­tive’s Of­fice is re­view­ing tar­iffs on a fur­ther $200bn in Chi­nese im­ports and those du­ties could start once a com­ment pe­riod ends on Septem­ber 6. In re­sponse, China has threat­ened up to 25pc tar­iffs on $60bn in Amer­i­can im­ports.

While trade ten­sions are be­ing ratch­et­ing up, China’s trade sur­plus with the US stood at $28.1bn in July, close to the record-high in June, data re­leased yes­ter­day showed.

China’s ex­ports grew faster than ex­pected, while im­ports surged, show­ing both do­mes­tic and in­ter­na­tional de­mand have so far been able to shrug off the un­cer­tainty of the trade con­flict.

Ex­ports rose 12.2pc in July in dol­lar terms from a year ear­lier, the cus­toms ad­min­is­tra­tion said, faster than the fore­cast 10pc.

Im­ports climbed 27.3pc, leav­ing a trade sur­plus of $28bn.

As the world’s largest ex­porter, China is still ben­e­fit­ing from ro­bust global de­mand, but in­creas­ing ten­sions and ris­ing trade bar­ri­ers are weigh­ing on the out­look.

“The higher-than-ex­pected im­ports were pushed up by en­ergy prices, which nar­rowed the trade balance,” said Iris Pang, greater China econ­o­mist at ING Whole­sale Bank­ing in Hong Kong.

“The im­pact of tar­iffs on ex­ports is yet to be re­flected. We will see a full-month tar­iff ef­fect in Au­gust.”

In the mean­time, China’s econ­omy is show­ing signs of weak­ness – the yuan has been on a los­ing streak for more than a month, the equity mar­ket has suf­fered de­clines, and other early in­di­ca­tors are point­ing to a slow­down.

The cen­tral bank has made it more ex­pen­sive to bet against the yuan in a bid to ease pres­sure on the cur­rency.

“Look­ing for­ward... the out­look for China’s ex­ports is grim in view of the es­ca­lat­ing trade war,” said Chang Shu and Field­ing Chen of Bloomberg Eco­nom­ics.

“Our view is that ex­ports will be­come a drag on growth” and pol­icy sup­port will be stepped up.” (Bloomberg)

US Pres­i­dent Don­ald Trump is plan­ning fur­ther tar­iffs

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