China hits back on Trump tariffs as Europe off hook for now

25 March, 2018, 00:54 | Author: Barbara Daniel
  • China could face higher prices for fruit, nuts in tariff battle with US, but even that's not certain

China said Friday that it planned to raise tariffs on a $3 billion list of us goods, including pork, apples and steel pipes in response to the steel and aluminum duties earlier announced by Trump. The following day, Beijing hit back, saying it would levy 15 per cent tariffs on 120 types of United States products, including fruit, wine and steel pipes, worth US$977 million, and 25 per cent tariffs on a further eight other categories of goods, including pork and recycled aluminium, worth US$2 billion, if the tit-for-tat spat was not resolved.

A presidential memorandum signed by Trump will target up to $60 billion in Chinese goods with tariffs over what his administration says is misappropriation of U.S. intellectual property, but only after a 30-day consultation period that starts once a list is published.

Williams estimated that the $506 billion that China exported to the United States drove around 2.5 percent of its total gross domestic product, and the $50-60 billion targeted by the US tariffs contributed just around 0.25 percent.

China announced on Friday that it was considering higher tariffs for imported United States products worth about $3 billion to balance losses caused by the USA tariffs on steel and aluminium imports from Beijing.

That development, investors say, is due to fears of a global trade war erupting on the back of tariffs and talk of further protectionist measures from the US administration.

The Commerce Ministry announcement Friday made no mention of jetliners, soybeans or other products that are the biggest USA exports to China by value.

The tariffs are meant to address two problems: intellectual property theft by China and a steep and persistent trade deficit.

The United States had a record $375.2 billion goods trade deficit with China previous year.

A deal for the latter will not come in the next 45 days before the yet-to-be published US tariff list becomes effective.

While far from flawless, organizations such as the WTO have limited the scope of trade wars since the chaos of the 1930s. With budget deficits rising in coming years and tax cuts approved in December expected to hurt revenue, the Treasury has to sell more securities to pay the government's expenses.

This restrictive trade policy will not only undercut United States agricultural exports and economic growth, but will also cause undue harm to America's agricultural communities, which will likely bear the brunt of China's retaliatory measures.

The administration formally justified its tariffs by invoking Section 301 of the Trade Act of 1974, which allows the president to impose tariffs on countries in violation of global trade deals.

In the long run, some experts say the president's action will be positive for the United States and preserve American jobs - that is, if China doesn't retaliate.

"We have made it clear that we do not want a trade war". Aside from the EU Mr Lighthizer said Argentina, Australia, Brazil, Canada, Mexico and South Korea would be exempted. "It's certainly not in New Zealand's interest", he said.

President Trump's tariffs went out to the world with blinking lights that essentially say: "Don't like this?"

The government also criticized the use of the national security rationale and said it destabilizes global order.

The ministry said the list was aimed at offsetting the losses incurred from USA tariffs on steel and imports, which are due to take effect on Friday. And a rise in inflationary pressures could prompt the US central bank to speed up its pace of interest rate hikes, which could further slow economic growth.

"With the restrained response, China hopes Trump can realize his errors and mend his ways", said Xu Hongcai, deputy chief economist at the China Centre for International Economic Exchanges, a Beijing think tank.

The Trump administration is framing the move as a major turning point in US-China relations. He noted Beijing began a probe of USA sorghum in February after Trump announced the steel and aluminum tariffs.

Trump has been pressing Beijing to cut the country's trade surplus with the U.S.by $100 billion.

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