US, China hike tariffs as trade row intensifies

CHINA and the US imposed new tariff hikes on each other’s goods yesterday and Beijing accused Washington of bullying, while giving no sign of compromise in an intensifying battle over technology that is weighing on global economic growth.

US regulators went ahead with a planned 10% tax on a $200 billion (R2.8 trillion) list of 5 745 Chinese imports, including bicycles and furniture. China’s customs agency said it responded at noon by beginning to collect taxes of 5% or 10% on a $60bn list of 5 207 American goods, from honey to industrial chemicals.

The conflict stems from President Donald Trump’s complaints that Beijing steals or pressures foreign companies to hand over technology.

American officials say Chinese plans for state-led development of global competitors in robotics and other technologies violate its market-opening obligations, and might erode US industrial leadership.

China offered to narrow their politically sensitive, multibillion-dollar trade surplus with the US by purchasing more natural gas and other American exports.

Yesterday’s tariff hike follows a report by The Wall Street Journal that Chinese officials pulled out of a meeting to discuss possible talks proposed by Washington.

With no settlement in sight, forecasters say the conflict between the two biggest economies could trim global growth until 2020.

Yesterday ratings agency Fitch cut its forecasts for next year’s Chinese and global economic growth by 0.1 percentage points to 6.1% and 3.1%, respectively.

“The trade war is now a reality,” Fitch’s chief economist, Brian Coulton, said. “The downside risks to our global growth forecasts have also increased.”

Earlier, the two sides imposed 25% penalties on $34bn of each other’s goods in July, and another $16bn last month. Business groups say American companies also report Chinese regulators are starting to disrupt their operations through slower customs clearance and more environmental and other inspections.

Trump threatened last week to add $267bn in Chinese imports to the target list if Beijing retaliated for the latest US taxes. That would cover nearly everything China sells to the US.

Yesterday, China accused the US in a report of “trade bullyism” and of preaching “economic hegemony”.

As the fight intensifies, China is running out of US imports for retaliation. Yesterday’s increase leaves Beijing with about $40bn of goods for penalties, while the Washington has almost $200bn.