The Denver Post

Trump slaps 25% tariff on imports

- By Paul Wiseman and Ken Thomas

WASHINGTON» President Donald Trump brought the world’s two biggest economies to the brink of a trade war Friday by announcing a 25 percent tariff on up to $50 billion in Chinese imports to take effect July 6.

Beijing quickly responded that it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 U.S. exports, including farm products, autos and seafood, according to the Xinhua state news agency.

In announcing the U.S. tariffs, Trump said he was fulfilling a campaign pledge to crack down

on what he contends are China’s unfair trade practices and its efforts to undermine U.S. technology and intellectu­al property.

“We have the great brain power in Silicon Valley, and China and others steal those secrets,” Trump said on “Fox & Friends.” ‘‘We’re going to protect those secrets. Those are crown jewels for this country.”

The prospect of a U.S.-China trade war weighed on financial markets Friday. The Dow Jones industrial average was down more than 220 points in mid-afternoon trading before recovering somewhat to finish down 84 points. Other stock averages also declined.

The U.S. tariffs will cover 1,102 Chinese product lines worth about $50 billion a year. Included are 818 items, worth $34 billion a year, from a list of 1,333 the administra­tion had released in April. After receiving public comment, the U.S. removed 515 product lines from the list, including TVs and some pharmaceut­icals, according to a senior administra­tion official who briefed reporters on condition of anonymity.

The administra­tion is targeting an additional 284 Chinese products, which it says benefit from Beijing’s strong-armed industrial policies, worth $16 billion a year. But it won’t impose those tariffs until it gathers public comments. U.S. companies that rely on the targeted imports — and can’t find substitute­s — can apply for exemptions from the tariffs.

The Trump administra­tion has sought to protect consumers from a direct impact from the tariffs, which amount to a tax on imports. The tariffs target mainly Chinese industrial machinery, aerospace parts and communicat­ions technology, while sparing such consumer goods as smartphone­s, TVs, toys and clothes that Americans purchase by the truckload from China.

These tariffs will impose higher costs on U.S. companies that use the equipment. And over time, those costs could be passed on to consumers. But the impact won’t be as visible as it would be if consumer products were taxed directly.

By contrast, the Trump administra­tion this year imposed steep tariffs on imported washing machines. By May, the cost of laundry equipment had jumped 17 percent from two months earlier, according to government data.

The administra­tion characteri­zed the tariffs it announced Friday as entirely proper.

“It’s thorough, it’s moderate, it’s appropriat­e,” U.S. Trade Rep. Robert Lighthizer said on Fox Business Network’s “Mornings With Maria.”

Lighthizer added, “Our hope is that it doesn’t lead to a rash reaction from China.”

But Beijing’s Commerce Ministry retorted: “The Chinese side doesn’t want to fight a trade war, but facing the shortsight­edness of the U.S. side, China has to fight back strongly. We will immediatel­y introduce the same scale and equal taxation measures, and all economic and trade achievemen­ts reached by the two sides will be invalidate­d.”

A ministry statement gave no details of what U.S. goods would be hit by Beijing’s retaliator­y tariffs. But China in April had announced possible targets, including light aircraft, orange juice, whiskey, beef and soybeans — an economical­ly and politicall­y important export from America’s heartland.

“The farmer can maybe look to their soybean associatio­ns for help to find other markets, but that doesn’t happen immediatel­y,” said Dan Basse of AgResource, an agricultur­al research and advisory firm. “There’s not much the farmer can do right now.”

The longer-term concern, Basse said, is that China will increasing­ly look to Argentina and Brazil and that the United States will lose market share.

Trump has imposed tariffs on steel and aluminum imports from Canada, Mexico and European allies, sparking anger and retaliator­y threats from some of America’s closest longtime allies. But his proposed tariffs against China risk igniting a damaging trade war involving the world’s two biggest economies.

Trump’s decision follows his summit with North Korean leader Kim Jong Un. The president has coordinate­d closely with China on efforts to pressure Pyongyang to eliminate its nuclear arsenal. But he signaled that whatever the implicatio­ns for that or other issues, “I have to do what I have to do” to address China’s trade policies.

By June 30, the administra­tion is expected to finish writing rules to restrict China’s ability to invest in U.S. technology.

Most of all, the U.S. tariffs are a response to China’s attempts to supplant U.S. technologi­cal dominance, including outright theft of trade secrets and its requiremen­t that U.S. companies share technology in exchange for access to the Chinese market.

The Trump administra­tion has argued that Beijing subsidies favored industries, encouragin­g them to overinvest and overproduc­e. The result: China has flooded world markets in steel, aluminum, solar panels and other products, thereby undercutti­ng prices and putting foreign rivals out of business.

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