Trade dispute with Chinese off, running
U.S. imposes $34B in tariffs in 1st shot; Beijing sets reply
WASHINGTON — The United States fired the biggest shot yet in the global trade war by imposing tariffs on $34 billion of Chinese imports late Thursday, delivering on a promise by President Donald Trump to his political supporters that risks provoking retaliation and rattling the world economy.
The duties on Chinese goods were to start at 11:01 p.m. Thursday. Levies on another $16 billion of goods could follow in two weeks, Trump earlier told reporters, before suggesting the final total could eventually reach $550 billion, a figure that exceeds all of U.S. goods imported from China in 2017.
U.S. customs officials will begin collecting an additional 25 percent tariff on imports from China of goods ranging from farming plows to semiconductors and airplane parts. It’s the first time the U.S. has imposed tariffs directly aimed at Chinese goods after months in which Trump accused Beijing of stealing American intellectual property and unfairly swelling America’s trade deficit.
“China will not bow in the face of threats and blackmail, nor will it be shaken in its resolve to defend global
free trade,” a spokesman for Beijing’s Commerce Ministry declared earlier Thursday.
After the tariffs took effect, China said it “must counterattack” but gave no immediate details of possible retaliation.
Trump, who ran for the White House on a vow to force China and other nations to overhaul their policies, has insisted that a trade war would be easy to win.
Yet among the people and business in both countries that are suddenly under threat from higher costs, closed-off markets and deep uncertainties, there’s far less confidence. A trade war between the world’s two biggest economies will leave casualties — from makers of musical instruments to farmers in America’s Midwest to a manufacturer of soldering irons south of Shanghai.
In some areas and industries, pain is already being felt.
“There’s going to be an awful lot of battles lost on the way,” said Tim Velde, a fourth-generation farmer in western Minnesota’s Yellow Medicine County who was bracing for China’s tariffs on American soybeans. “I don’t see anybody winning.”
Tong Feibing, general manager of China’s Ningbo Top East Technology Co., which makes soldering irons and had been exporting 30 percent of its output to the United States — before sales plunged in advance of tariffs — is worried.
“There is a chance the company will lose money and might bankrupt,” Tong warned. “I will do whatever I can, including layoffs.”
The Trump administration
wants China to drop what it calls its predatory drive to supplant American technological dominance, through tactics that include forcing U.S. companies to reveal trade secrets in return for access to the Chinese market and committing cyber-theft.
Trade wars can draw blood in several ways. Exporters face taxes on what they ship across the Pacific. This makes their products more expensive and less competitive.
And importers must pay more for the foreign machinery and components they buy — and then decide whether they can afford to pass along those higher costs to their customers.
In choosing the Chinese goods to tax, the Trump administration tried to limit the impact on American consumers. It aimed instead mainly at industrial products. Yet those tariffs will hurt American companies that rely on Chinese-made components and machinery.
Most Americans wouldn’t recognize the vast majority of the Chinese imports the Trump administration is targeting. But they would recognize the companies that use them.
PetSmart, for example, says the administration’s tariffs will inflate the cost of imported water filters for home aquariums. Jacuzzi has said its hot tubs and bathtubs will be affected by higher U.S. tariffs on pumps. Newell Brands, which owns Rubbermaid, says Americans may face higher costs for its imported FoodSaver vacuum sealer products, which are used to store and preserve food.
Moog Music Inc. in Asheville, N.C., known for synthesizers popularized by rock musicians in the 1960s, warns that the tariffs on imported Chinese circuit boards and other parts will “immediately and drastically” increase the cost of its instruments and might require layoffs. In a worst-case scenario, Moog said, it might have to move some manufacturing
overseas. It’s urging employees to call their congressional representatives to protest the tariffs.
In southern China, a company that makes LED lighting is scrambling to find alternatives to the U.S. market, which used to buy 30 percent of its output. The company’s salespeople have looked instead for buyers from Europe, Southeast Asia and the Middle East, according to company manager Yang Zhuangnin. He said the company, based near Hong Kong, will try to make improvements to draw American buyers despite higher prices.
“Another method we have been thinking about is to send almost-finished products to another country, and then do the simple production there and re-export to the United States,” Yang said.
In selecting American products for retaliatory tariffs, Beijing chose many that would inflict political as well as economic pain. Its target list is heavy on American farm exports — a shot at Trump supporters in the nation’s heartland.
Don Bloss, who grows corn, soybeans and sorghum in southeastern Nebraska, says the tariff threat had already driven down crop prices before they went into effect.
“Right now,” Bloss said, “it’s a matter of how much money you’re going to lose, not how much money you’re going to make.”
Automakers could endure pain, too, once China applies higher tariffs to vehicles from the United States. Beijing already imposes a 25 percent tariff on imported autos. Retaliatory tariffs would likely double that tax, said Kristen Dziczek of the Center for Automotive
Research, an industry think tank. That could mean trouble for BMW, Mercedes, Tesla and Ford, the largest exporters of vehicles from the U.S. to China.
All would likely raise prices, which would slow sales and could force production cuts. A result could be layoffs, Dziczek said, especially at a BMW SUV factory near Spartanburg, S.C., and a Mercedes SUV plant near Tuscaloosa, Ala.
Trump’s trade team insists that the United States wields a decisive edge over China in a trade war: China sells much more to America ($524 billion last year) than Americans sell China ($188 billion) and so is more vulnerable to tariffs.
But trade analysts are skeptical that Beijing will blink first. The question, said Philip Levy of the Chicago Council on Global Affairs, is which side has more political tolerance for pain.
“From China’s perspective, this is an unacceptable foreign assault that they will resist at all costs,” said Levy, who was a trade adviser in President George W. Bush’s White House. “From the perspective of U.S. businesses and farms, this is a self-inflicted wound. That will lead to mounting pressure on members of Congress, which does retain the power to do something about it.”
Information for this article was contributed by Steve Karnowski, David Pitt, Tom Krisher, Christopher Bodeen, Joe McDonald Fu Ting of The Associated Press; and by Xiaoqing Pi,Yinan Zhao,Andrew Mayeda and Jennifer Jacobs of Bloomberg News.