Upping ante, Trump threatens new tariffs on Chinese imports
China warns it will retaliate...
WASHINGTON — President Donald Trump directed the US Trade Representative to prepare new tariffs on $200 billion in Chinese imports as the two nations moved closer to a trade war.
The tariffs, which Trump wants set at a 10% rate, would be the latest round of punitive measures in an escalating dispute over the large trade imbalance between the two countries. Trump recently ordered tariffs on $50 billion in Chinese goods in retaliation for intellectual property theft. The tariffs were quickly matched by China on US exports, a move that drew the president’s ire.
“China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology,” Trump said in a statement announcing the new action. “Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong.”
Trump added: “These tariffs will go into effect if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.”
China warned it will retaliate against President Donald Trump’s latest tariff threat, fueling fears their escalating dispute could harm global trade and economic growth.
The Commerce Ministry criticized Trump’s order to prepare tariffs on $200 billion of Chinese goods as blackmail. In a forcefully worded statement, it said Beijing is ready to “defend the interests of the Chinese people and enterprises.”
“If the US side becomes irrational and issues the list, China will have to adopt comprehensive measures in quantity and quality in order to make strong countermeasures,” said the statement.
Chinese regulators have the option of broadening their retaliation by tying up American companies in tax or anti-monopoly investigations or by denying or revoking licenses.
“China could target US firms through tax and regulatory policies,” said Citigroup in a report.
Washington’s dispute with China is part of broader US complaints about global trading conditions that have prompted Trump to raise duties on steel, aluminum, washing machines or solar panels from Canada, Europe, Japan and South Korea.
Economists warn Washington might be undercutting its negotiating position by alienating potential allies. Trump said that if China responds to this fresh round of tariffs, then he will move to counter “by pursuing additional tariffs on another $200 billion of goods.”
It wasn’t immediately clear when the new US tariffs could be put in place, as the trade office has yet to identify the Chinese goods to be penalized or conduct a legal review. The first round of penalties announced by both nations is set to take effect July 6.
The intellectual property sanctions were the latest in a spate of protectionist measures unveiled by Trump in recent months that included tariffs on steel and aluminum imports to the US and a tough rhetoric on trade negotiations from North America to Asia.
The escalation in the dispute with China may also serve as a warning to other trading partners with whom Trump has been feuding, including Canada and the European Union.
The move quickly drew praise from former Trump senior adviser Steve Bannon, who told The Associated Press: “President Trump told China and the world tonight that America will not back down when it comes to economic aggression.”
But Wall Street has viewed the escalating trade tensions with wariness, fearful they could strangle the economic growth achieved during Trump’s watch. Gary Cohn, Trump’s former top economic adviser, said last week that a “tariff battle” could result in price inflation and consumer debt – “historic ingredients for an economic slowdown.”
Trump’s comments came hours after the top US diplomat accused China of engaging in “predatory economics 101” and an “unprecedented level of larceny” of intellectual property.
Secretary of State Mike Pompeo made the remarks at the Detroit Economic Club as global markets reacted to trade tensions between the US and China.
He said China’s recent claims of “openness and globalization” are “a joke.” He added that China is a “predatory economic government” that is “long overdue in being tackled,” matters that include IP theft and Chinese steel and aluminum flooding the US market.
“Everyone knows … China is the main perpetrator,” he said. “It’s an unprecedented level of larceny.”
“Just ask yourself: Would China have allowed America to do to it what China has done to America?” he said later. “This is predatory economics 101.”
The Chinese Embassy in Washington did not respond to a request for comment.
Pompeo raised the trade issue directly with China last week, when he met in Beijing with President Xi Jinping and others.
“I reminded him that’s not fair competition,” Pompeo said.
President Donald Trump had announced a 25% on up to $50 billion in Chinese imports. China is retaliating by raising import duties on $34 billion worth of American goods, including soybeans, electric cars and whiskey. Trump also has slapped tariffs on steel and aluminum imports from Canada, Mexico and European allies.
Pompeo described US actions as “economic diplomacy,” which, when done right, strengthens national security and international alliances, he added.
“We use American power, economic might and influence as a tool of economic policy,” he said. “We do our best to call out unfair economic behaviours as well.”
In a statement, Trump says he has an “excellent relationship” with Xi, “but the United States will no longer be taken advantage of on trade by China and other countries in the world.”