Trump threatens higher tariffs on China

Muriel Colon
August 4, 2018

One of the cited reasons behind today's market slide which started in Asia and promptly swept the rest of the globe, is a belated appreciation of Tuesday's news that the Trump administration is now considering more than doubling proposed tariffs on a further $200 billion worth of Chinese goods to 25%, up from an original 10%.

"The US side has repeatedly escalated the situation against the interests of both enterprises and consumers", the Chinese Commerce Ministry said in its statement.

President Trump and the European Commission President Jean-Claude Juncker agreed last week to put their tariffs on hold while the two sides negotiate, including on the dispute over steel tariffs, which gives the USA more leverage to pressure China.

In Beijing Chinese foreign ministry spokesman Geng Shuang said Wednesday that "blackmail and pressure from the U.S. side will never work on China".

The issue of China's response to USA threats of higher tariffs also came up during the daily news briefing by the Chinese Foreign Ministry.

U.S. President Donald Trump's administration imposed 25 per cent tariffs on $34 billion in Chinese goods July 6 and sources say more penalties could come. What these numbers do not show is that if United States goods are sent to China for assembly and then returned to the United States, these so-called "intermediate goods" are considered Chinese imports, even if the parts are made in the US.

That reflected American frustration that Beijing retaliated by raising its own duties on us imports in response to tariff hikes on Chinese goods over complaints the communist government steals or pressures companies to hand over technology.

The ministerial talks provided a useful occasion to inform the EU's trade partners about the results of last week's meeting between Trump and European Commission President Jean-Claude Juncker, according to a commission official.

The US is considering 25% tariffs on $200bn (£152bn) of Chinese goods - more than double the 10% initially planned.

China has already warned it would retaliate if the United States went ahead with the plan, accusing Washington of blackmail.

'If we're going to use tariffs, this gives us more flexibility and it's a more meaningful threat,' he said, adding that Trump's pressure strategy will not work if he does not resolve trade disputes with United States allies such as the European Union, Mexico and Canada.

Meanwhile, the Information Technology Industry Council, which represents major IT users like Google, Facebook and Microsoft, immediately called the move by the administration "irresponsible, counterproductive", and said it would "only do more harm to Americans across the country".

China's Foreign Ministry spokesperson Geng Shuang said at a press briefing that President Trump's threats at "blackmail" would fail. Announcing a higher tariff is required ahead of the hearings and will send a signal that the Trump administration is upping the pressure on China to make serious concessions.

The Chinese have already proposed buying more USA goods in order to settle the dispute, only to have the White House-which wants to win a broader argument about intellectual property and subsidies-reject the proposal.

The U.S. Trade Representative's office initially had set a deadline for final public comments on the 10 percent proposed tariffs to be filed by August 30, with public hearings scheduled for August 20-23.

While the tariffs would not be imposed until after a period of public comment, raising the proposed level to 25 percent could escalate the trade dispute between the world's two biggest economies.

Have these tariffs impacted American businesses at all?

Asked about communication between the two countries on the dispute, Geng said China had "always upheld using dialogue and consultations to handle trade frictions", but that dialogue must be based on mutual respect and equality.

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