Caixin
Sep 18, 2018 11:16 PM
ECONOMY

China Strikes Back With Tariffs on $60 Billion of U.S. Imports

Photo: VCG
Photo: VCG

China said it would levy new tariffs on an additional $60 billion a year of U.S. imports in retaliation to the latest round of tariffs imposed by President Donald Trump in the expanding trade war.

The retaliatory tariffs will range from 5% to 10% and cover 5,207 items, according to a statement late Tuesday from China’s State Council. The new tariffs, to be applied on products including meats, juices and chemicals, will take effect Sept. 24.

“If the U.S. makes further moves on tariffs, China will response with countermeasures,” the cabinet said.

China’s response came shortly after the Trump administration carried out its earlier threat to slap 10% tariffs on $200 billion a year of Chinese goods starting next week. The duties will rise to 25% at the beginning of 2019, according to a White House statement.

“The implementation of the tariffs is aimed to rein in the escalation of the trade conflict and a forced response to the U.S. unilateralism and trade protectionism,” China’s cabinet said in the statement. China still hopes to “end the trade tensions through talk and consultation on the basis of equity, integrity and mutual respect,” it said.

The worsening tariff clash between the world’s two largest economies fueled fears of a deadlock in efforts to negotiate a solution. Two Chinese government ministries last week confirmed that U.S. Treasury Secretary Steven Mnuchin had invited a delegation from Beijing to Washington for another round of trade talks. The two countries have held four rounds of discussions but failed to reach a resolution.

The latest round of U.S. tariffs brought the total amount of Chinese goods affected since July to $250 billion a year, roughly half of China’s shipments to the U.S. in 2017.

China purchased around $130 billion of American goods last year — less than a third of U.S. purchases from China. China’s new tariffs put roughly $110 billion of U.S. exports under punitive duties.

Some Chinese officials have suggested responding to Trump’s tariffs with harsher measures such as export bans. Lou Jiwei, former finance minister, said at a forum over the weekend that China could block exports of key components, intermediate materials and equipment that U.S. manufacturers depend on.

As Beijing released the latest tariff list, Trump threatened more retaliatory measures on Twitter.

“China has been taking advantage of the United States on Trade for many years. They also know that I am the one that knows how to stop it,” Trump wrote. “There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!”

In the Monday statement announcing additional tariffs, Trump warned that if Beijing retaliated, he would “immediately pursue phase three,” which would involve levies on $267 billion more Chinese products. That would extend duties to the value of China’s entire annual exports to the U.S.

China’s commerce ministry nonetheless pledged to retaliate.

“China has no choice but to retaliate in order to protect its legitimate rights and interests as well as the global free trade order,” the ministry said in a statement earlier Tuesday.

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Contact reporter Han Wei (weihan@caixin.com)

Read more about the China-U.S. trade war.

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