Trump escalates trade war with China, orders tariff on imports worth another $200bn

The Donald Trump administration has planned more tariff increases in case of continued Chinese retaliation that could ultimately cover the entire worth of imports from China, $505 billion.

United States President Donald Trump on Tuesday escalated the trade war with China, ordering imposition of 10% tariff on an additional $200 billion worth of imports from China, and sent a clear signal to Beijing and other trading parters in his crosshairs that he is not backing down.

This comes on top of a 25% tariff on $34 billion worth of imports from China that came into effect last week. The same levy will cover an additional $16 billion, but at a later date.

Beijing had retaliated in kind to the first set of US tariffs on Chinese imports, slapping tariffs on $34 billion of imports from the United States. And it is likely to respond in kind to the new tariff as well.

“As a result of China’s retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10% on an additional $200 billion of Chinese imports,” Robert Lighthizer, the US trade representative (USTR), said in a statement.

The US has accused China of unfair trade practices such as forcing American firms to transfer technology as a condition for operating in China and theft of intellectual property.

The new tariff will go into effect in August after going through a process of public comment and review and a public hearing, which is scheduled for August.

Goods covered ranged from food articles such as tuna, salmon and other fish and frog legs, to luggage, tires, dog leashes, handbags, baseball gloves, furniture, apparel, mattresses, electric lamps, television cameras, automobile parts and accessories, and bicycle parts.

While cranking up the tariff war, the US has also indicated its willingness to talk. “As in the past, the United States is willing to engage in efforts that could lead to a resolution of our concerns about China’s unfair trade practices and to China opening its market to US goods and services,” Lighthizer said in the statement.

“In the meantime, we will remain vigilant in defending the ability of our workers and businesses to compete on a fair and reciprocal basis.”

While the new tariff may speak of President Trump’s resolve to continue down this path, he does seem to have made some concessions. He had earlier said the new round would target $100 billion of Chinese imports at the same rate as the first, 25%, which he scaled down to 10%, perhaps to protect consumers. But he expanded the target pool from $100 billion to $200 billion.

The Trump administration has planned more tariff increases in case of continued Chinese retaliation that could ultimately cover the entire worth of imports from China, $505 billion. He told reporters last week that after the “34 ($34 billion), and then you have another 16 in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300”. The US is confident China will buckle.

The Trump administration has also slapped 25% and 10% tariffs on all steel and aluminium imports, including from India and EU allies, that have earned their own shares of retaliatory tariffs from these partners. India, for instance, has slapped tariff on 29 imports from the US worth $235 million. The EU has hit back with tariffs on $3.2 billion worth of goods from the US.

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