Date
17 October 2018
US President Donald Trump and Chinese President Xi Jinping in Beijing in 2017. Retaliatory steps taken by China against the US are stoking fears of a full-blown trade war between the world's two biggest economies. Photo: AFP
US President Donald Trump and Chinese President Xi Jinping in Beijing in 2017. Retaliatory steps taken by China against the US are stoking fears of a full-blown trade war between the world's two biggest economies. Photo: AFP

Trade tensions worsen as China raises tariffs on US goods

China has increased tariffs by up to 25 percent on 128 US products, from frozen pork and wine to certain fruits and nuts, in an apparent response to US duties on imports of aluminum and steel, Reuters reports.

The tariffs, which took effect on Monday, were announced late on Sunday by China’s finance ministry and matched a list of possible tariffs on up to US$3 billion in US goods published by China on March 23.

In Washington, officials said the administration this week will unveil a list of advanced technology Chinese imports targeted for US tariffs to punish Beijing over technology transfer policies.

The tariffs would be imposed on US$50 billion to US$60 billion worth of products benefiting from Beijing’s “Made in China 2025″ industrial development program, but it may be more than two months before the import curbs take effect, the officials said.

White House trade adviser Peter Navarro said on Monday he does not see the United States and China responding to each other’s tariff moves in a tit-for-tat escalation of trade tensions.

Asked on CNBC television what the US response should be to about China’s tariffs, Navarro said: “I don’t think this is going to be an action-response, action-response. That’s not what this should be about, that just leads to escalation spirals.”

Navarro said President Donald Trump is firmly committed to a course of action that would level the trade playing field between the two countries.

Soon after Beijing’s announcement, an editorial in the state-owned Global Times newspaper warned that if the US had thought China would not retaliate or would only take symbolic countermeasures, it could “say goodbye to that delusion”.

“Even though China and the US have not publicly said they are in a trade war, the sparks of such a war have already started to fly,” the newspaper said.

The Ministry of Commerce said it was suspending its obligations to the World Trade Organization (WTO) to reduce tariffs on 120 US goods, including fruit and ethanol. The tariffs on those products will be raised by an extra 15 percent.

Eight other products, including pork and scrap aluminum, would now be subject to additional tariffs of 25 percent, it said, with the measures effective starting April 2.

“China’s suspension of its tariff concessions is a legitimate action adopted under WTO rules to safeguard China’s interests,” the finance ministry said.

In response to China’s move, Washington said Beijing’s subsidies and overcapacity were behind the action on steel.

“Instead of targeting fairly traded US exports, China needs to stop its unfair trading practices which are harming US national security and distorting global markets,” White House spokeswoman Lindsay Walters said in a statement.

More US tariffs

US President Donald Trump is separately preparing to impose tariffs of more than US$50 billion on Chinese goods following an investigation under Section 301 of the 1974 US Trade Act.

The US administration says China has systematically misappropriated American intellectual property, allegations China denies.

About the Section 301 investigation, China had “yet to unsheathe its sword”, the official Xinhua news agency said.

Sometime this week, the Trump administration is expected to unveil a list of Chinese goods that could be subjected to new US tariffs.

US technology industry officials said they expected the list to target products that benefit from Beijing’s “Made in China 2025” program, which aims to upgrade the domestic manufacturing base with more advanced products.

China has repeatedly promised to open its economy further, but many foreign companies complain of unfair treatment. China warned the US on Thursday not to open a Pandora’s Box and spark a flurry of protectionist practices across the globe.

“There are some people in the West who think that China looks tough for the sake of a domestic audience, and would easily make concessions,” the Global Times said.

“But they are wrong.”

The Global Times is run by the ruling Communist Party’s official People’s Daily, although its stance does not necessarily reflect government policy.

Reaction to China’s measures varied on social media, with some saying Chinese customers would be the ones to ultimately pay for a trade war.

“Why not directly target soybean and planes? The tariffs that China announced today don’t sound a lot to me,” said a user on the Weibo microblog platform.

Aircraft and soybeans were China’s biggest US imports by value last year.

In a statement published on Monday morning, the commerce ministry said the US had “seriously violated” the principles of non-discrimination enshrined in WTO rules, and had also damaged China’s interests.

“China’s suspension of some of its obligations to the United States is its legitimate right as a member of the World Trade Organization,” it said, adding that differences should be resolved through negotiation.

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CG

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