Trade war worsens as China steps up tariffs
Hikes set to counter U.S. tariffs on $200B in items from China.
The U.S.-China trade BEIJING — war escalated further Tuesday, with China announcing retaliatory tax increases on $60 billion worth of U.S. imports, including coffee, honey and industrial chemicals.
The increases are in response to the U.S. announc- ing it will impose tariffs on $200 billion worth of Chi- nese-made goods starting next week. The tariffs will start at 10 percent, then go to 25 per- cent on Jan. 1.
China’s Finance Ministry said its tariff increases are aimed at curbing “trade friction” and the “unilateralism and protectionism of the United States.”
There was no word on whether China would back out of trade talks it said it was invited to by the U.S., but a Chinese Commerce Ministry statement said the U.S. increase “brings new uncertainty to the consultations.”
The American Chamber of Commerce in China warned Tuesday that Washington is underestimating Beijing’s determination to fight back.
“The downward spiral that we have previously warned about now seems certain to materialize,” said William Zarit, the chamber’s chairman.
At the root of the trade war are U.S. complaints about Chi- na’s plans to try to overtake U.S. technological supremacy. Those plans include “Made in China 2025,” which calls for creating powerful Chinese entities to compete in robotics and other fields. The U.S. says the plans are based on stolen technology, violate China’s market-opening commitments and might erode Amer- ican industrial leadership.
U.S. companies and trad- ing partners including the European Union and Japan have long-standing complaints about Chinese market barriers and industrial policy. But they object to Trump’s tactics and warn the dispute could chill global economic growth and undermine international trade regulation.
Trump has strained ties with potential allies including the European Union, Canada and Mexico by raising tariffs on imported steel and aluminum. He demanded Canada and Mexico renegotiate the North American Free Trade Agreement to make it more favorable to the United States.
Trump has also complained about America’s gaping trade deficit — $336 billion last year — with China, its biggest trad- ing partner.
“China has had many oppor- tunities to fully address our concerns,” Trump said in a statement. “I urge China’s leaders to take swift action to end their country’s unfair trade practices.”
The trade gap means China will run out of U.S. imports to tax while the U.S. still has plenty of Chinese imports to target. But Beijing has other ways to retaliate. U.S. firms say regulators are already starting to disrupt their operations.
Last week, the American C hambers of Commerce in Chi n a and in Sha n g- hai reported 52 percent of more than 430 companies that replied to a survey said they have faced slower cus- toms clearance and increased inspections and bureaucratic procedures.
The U.S. taxes are targeting Chinese goods that Washing- ton says have benefited from improper industrial policies. Beijing’s tariffs have hit soybeans and other farm goods from states that voted for Trump in 2016.
“Contrary to views in Wash- ington, China can — and will — dig its heels in and we are not optimistic about the prospect for a resolution in the short term,” said Zarit of the Amer- ican Chamber of Commerce.
In the first two rounds of tariffs, the Trump administra- tion took care to try to spare U.S. consumers from the direct impact of the import taxes. The tariffs focused on industrial products, not on things Americans buy at the mall or via Amazon. By expanding the list to $200 billion of Chinese products, Trump may spread the pain to ordinary house- holds. The administration is targeting a bewildering vari- ety of goods — from sockeye salmon to baseball gloves to bamboo mats — forcing U.S. companies to scramble for suppliers outside China, absorb the import taxes or pass along the cost to their customers.