China Announces Retaliatory Tariffs On $60 Billion In U.S. Goods

Kenny Grant
August 4, 2018

But President Donald Trump now wants U.S. Trade Representative Robert Lighthizer to consider more than doubling those tariffs to 25 percent.

Beijing warned the threats will only be counter-productive for ongoing trade negotiations.

A Chinese foreign ministry spokesman had earlier called on Washington to "come to its senses" and settle the dispute.

China vowed on Thursday to retaliate if the United States acted on a threat to raise tariffs on the Asian nation's exports, fueling fears in financial markets that the trade war between the world's two biggest economies would escalate.

Lighthizer told reporters on Wednesday that the additional tariffs are necessary because the original duties did not prompt China to change its trade policy. China also depends on trade more than the U.S. Beijing responded by imposing similar charges on the same amount of US products.

Jake Colvin, vice president of the National Foreign Trade Council, said the Trump administration could be boxing itself into a corner. But Fred Bergsten, founding director of the Peterson Institute for International Economics, told CNBC that China would be able to absorb blows more easily than Washington.

The Trump administration said it's weighing whether to increase the proposed tariff on $200 billion of Chinese goods to 25 percent from 10 percent, stepping up pressure on Beijing to change its trade practices.

Washington imposed additional 25 percent tariffs on $34 billion of Chinese goods July 6 in response to complaints Beijing steals or pressures companies to hand over technology. "If the U.S. takes further actions to escalate, China will retaliate, resolutely protecting our fair and legitimate rights", he added.

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Last month, Trump threatened to impose tariffs on all goods imported from China. That prompted concern among American companies that retaliation might expand to disrupting their operations in China.

China's imports from the United States past year totaled $153.9 billion.

The dynamic has proved hard to change, given US consumers' reliance on Chinese goods.

"On June 18, the President directed me to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent, in response to China's decision to cause further harm to USA workers, farmers, and businesses by imposing retaliatory duties on US goods".

The $200 billion list of goods targeted for tariffs - which also include Chinese tilapia fish, printed circuit boards and lighting products - would have a bigger impact on consumers than previous rounds of tariffs.

The U.S. economy is heavily reliant on importing more than $500 billion in goods each year from China.

"The trade war is a tactic by Trump, but if it eventually evolves into a strategic confrontation, the result will undoubtedly be disastrous", he said. A fall in exchange rates could neutralise the USA tariffs by making Chinese goods cheaper for overseas customers to buy.

Mickey Kantor, who was US trade representative under President Bill Clinton, warned that a trade war with China will take a toll on a USA healthy economy that from April through June registered the fastest growth since 2014. -China trade at the Chinese Academy of Social Sciences in Beijing, said the tensions have reached a "critical moment".

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