US raises tar­iff stakes, again

The New Paper - - NEWS -

Wash­ing­ton threat­ens tar­iffs on $270b worth of Chi­nese goods, China calls it ‘com­pletely un­ac­cept­able’

WASH­ING­TON/BEI­JING The Trump ad­min­is­tra­tion raised the stakes in its trade dis­pute with China, threat­en­ing 10 per cent tar­iffs on a list of US$200 bil­lion (S$270 bil­lion) worth of Chi­nese im­ports, send­ing stocks lower and prompt­ing Bei­jing to warn that it would be forced to re­spond.

China’s Com­merce Min­istry said yes­ter­day that it was “shocked” and would com­plain to the World Trade Or­gan­i­sa­tion. It called the US ac­tions “com­pletely un­ac­cept­able”.

Bei­jing has said it would hit back against Wash­ing­ton’s es­ca­lat­ing tar­iff mea­sures, a threat that US busi­nesses in China fear could mean any­thing from stepped-up in­spec­tions to even con­sumer boy­cotts.

The US$200 bil­lion far ex­ceeds the to­tal value of goods China im­ports from the US, which means Bei­jing may need to think of cre­ative ways to re­spond to such US mea­sures.

On Tues­day, US of­fi­cials is­sued a list of thou­sands of Chi­nese im­ports the Trump ad­min­is­tra­tion wants to hit with the new tar­iffs, in­clud­ing hundreds of food prod­ucts as well as to­bacco, chem­i­cals, coal, steel and alu­minium, prompt­ing crit­i­cism from some US in­dus­try groups.

It in­cludes con­sumer goods from car tyres to toi­let pa­per.

“For over a year, the Trump ad­min­is­tra­tion has pa­tiently urged China to stop its un­fair prac­tices, open its mar­ket and en­gage in true mar­ket com­pe­ti­tion,” US Trade Rep­re­sen­ta­tive Robert Lighthizer said in an­nounc­ing the pro­posed tar­iffs.

“Rather than ad­dress our le­git­i­mate con­cerns, China has be­gun to re­tal­i­ate against US prod­ucts ... There is no jus­ti­fi­ca­tion for such ac­tion.”

Last week, Wash­ing­ton im­posed 25 per cent tar­iffs on US$34 bil­lion of Chi­nese im­ports, and Bei­jing re­sponded im­me­di­ately with match­ing tar­iffs on the same amount of US ex­ports to China. Each side is plan­ning tar­iffs on a fur­ther US$16 bil­lion in goods.

In­vestors fear an es­ca­lat­ing trade war be­tween the two could hit global growth and dam­age sen­ti­ment.

US Pres­i­dent Don­ald Trump has said he may ul­ti­mately im­pose tar­iffs on more than US$500 bil­lion worth of Chi­nese goods – roughly the to­tal amount of US im­ports from China last year.

The new list tar­gets many more con­sumer goods than those cov­ered un­der the tar­iffs im­posed last week, rais­ing the di­rect threat to con­sumers and re­tail com­pa­nies and in­creas­ing the stakes for law­mak­ers in the Repub­li­can party fac­ing elec­tions in Novem­ber.

The list is sub­ject to a twom­onth pub­lic com­ment pe­riod be­fore tak­ing ef­fect.


Some US busi­ness groups and law­mak­ers from Mr Trump’s Repub­li­can party were crit­i­cal of the es­ca­lat­ing tar­iffs.

Se­nate Fi­nance Com­mit­tee Chair­man Or­rin Hatch said it “ap­pears reck­less and is not a tar­geted ap­proach”.

The US Cham­ber of Com­merce has sup­ported Mr Trump’s do­mes­tic tax cuts and ef­forts to re­duce reg­u­la­tion of busi­nesses but does not back his tar­iff poli­cies.

“Tar­iffs are taxes, plain and sim­ple. Im­pos­ing taxes on an­other US$200 bil­lion worth of prod­ucts will raise the costs of every­day goods for Amer­i­can fam­i­lies, farm­ers, ranch­ers, work­ers and job cre­ators. It will also re­sult in re­tal­ia­tory tar­iffs, fur­ther hurt­ing Amer­i­can work­ers,” a Cham­ber spokesman said.

Mr Louis Kuijs, head of Asia Eco­nom­ics at Ox­ford Eco­nom­ics, said while he ex­pects China to strongly con­demn the US moves, its pol­icy re­sponse is likely to be limited for now.

“In part be­cause they have only limited am­mu­ni­tion and in part be­cause it is still early in the process on the US side,” he said.

As its dis­pute with Wash­ing­ton deep­ens, Bei­jing has been call­ing on other coun­tries to sup­port global free trade and has talked up ef­forts to ease in­vest­ment rules. Dur­ing a re­cent visit to Ger­many by Chi­nese Premier Li Ke­qiang, the coun­tries signed busi­ness deals worth more than US$23 bil­lion. – REUTERS

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