Date
17 October 2018
The US tariffs are proposed in response to China's policies that bolster its “stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as 'Made in China 2025'.” Photo: AFP/Gov.CN
The US tariffs are proposed in response to China's policies that bolster its “stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as 'Made in China 2025'.” Photo: AFP/Gov.CN

US unveils tariffs on US$50 billion worth of Chinese imports

The United States announced 25 percent tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices.

The US Trade Representative’s office unveiled a list of mainly non-consumer products representing about US$50 billion of annual imports that would nonetheless hit supply chains for many US manufacturers, Reuters reports.

The list ranges from chemicals to light-emitting diodes, motorcycles and dental devices.

Publication of the tariff lists starts a public comment and consultation period expected to last around two months, after which the USTR said it would issue a “final determination” on the product list. It has scheduled a May 15 public hearing on the tariffs.

China’s Ministry of Commerce said it “strongly condemns and firmly opposes” the proposed US tariffs following the Section 301 probe and will take counter-measures, according to the official Xinhua news agency.

The ministry said it “will soon take measure of equal intensity and scale against US goods”.

“We have the confidence and ability to respond to any protectionist measures by the United States,” MofCom said.

The Chinese embassy in Washington said: “As the Chinese saying goes, it is only polite to reciprocate. The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against US products in accordance with Chinese law”.

The USTR target list follows China’s imposition of tariffs on US$3 billion worth of US fruits, nuts, pork and wine to protest new US steel and aluminum tariffs imposed last month by US President Donald Trump.

The standoff between the world’s two largest economies has sparked market fears that they could spiral into a trade war that could crush global growth.

Cellphones, computers offlist

The USTR tariff list conspicuously excluded many consumer electronics products such as cellphones and laptop computers assembled in China and also did not include clothing and footwear, drawing a sigh of relief from retailers who had feared higher costs for American consumers.

It did include Chinese-made flat-panel television sets and many electronic components, including light-emitting diodes increasingly used in lighting products. It also targeted vehicles such as motorcycles and electric cars, aircraft parts and electrical gear.

USTR Robert Lighthizer had said the tariff list was developed using a computer algorithm designed to choose products that would inflict maximum pain on Chinese exporters, but limit the damage to US consumers.

The largest categories of US imports from China were communications equipment, totaling US$78 billion in 2017, with computer equipment second at US$58.6 billion, according to US Census data compiled by the Congressional Research Service.

China ran a US$375 billion goods trade surplus with the US in 2017, a figure that Trump has demanded be cut by US$100 billion.

But USTR said the China tariffs announced on Tuesday were proposed “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises”.

The agency added that such policies “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as ‘Made in China 2025′”.

China has denied that its laws require technology transfers and has threatened to retaliate against any US tariffs with trade sanctions of its own, with potential targets such as US soybeans, aircraft or heavy equipment.

The US list heavily targets advanced technology products that benefit from Beijing’s “Made in China 2025” program, which aims to replace advanced technology imports with domestic products and build a dominant position in future industries.

10 strategic industries

The state-led 2025 program targets 10 strategic industries: advanced information technology, robotics, aircraft, new energy vehicles, pharmaceuticals, electric power equipment, advanced materials, agricultural machinery, shipbuilding and marine engineering and advanced rail equipment.

Many products in those segments appear on the list, including antibiotics and industrial robots.

US business groups reacted cautiously, saying they agreed with Trump’s efforts to stop the theft of US intellectual property, but questioning whether tariffs were the right approach.

“Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers president Jay Simmons said in a statement.

US Senator Marco Rubio said in a letter to Lighthizer and Treasury Secretary Steven Mnuchin that he was glad to see “bold” action against China.

“These necessary actions constitute an important break with the appeasement of previous administrations, and provide an opportunity to chart a new course for America’s relationship with this strategic competitor,” Rubio wrote.

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CG

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