U.S. threatens raising tariffs to 25% on $200bn of Chinese goods

China warns U.S. trade deal is off if Trump’s tariffs continue

China warns U.S. trade deal is off if Trump’s tariffs continue

The White House on Wednesday proposed a 25 percent tariff on $200 billion worth of Chinese goods, more than double the 10 percent tax rate originally planned.

China vowed on Thursday to retaliate if the United States acted on a threat to raise tariffs on the Asian nation's exports, fueling fears in financial markets that the trade war between the world's two biggest economies would escalate.

Investors fear an escalating trade war between Washington and Beijing could hit global growth, and prominent US business groups have condemned Trump's aggressive tariffs. "If the USA takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests", spokesman Geng Shuang said at a regular press conference on Wednesday.

Daniel Ujczo, a lawyer with Dickinson Wright PLLC in Columbus, Ohio, said the US has a big incentive to smooth over the differences with friendly countries and get the tit-for-tat tariffs removed.

United States trade representative Robert Lighthizer had said on Wednesday that he had secured the green signal from Trump to consider raising the tariffs from the earlier planned 10% to 25% under an ongoing Section 301 targeting Chinese goods on grounds of alleged theft and forced transfer of technologies from USA companies.

Trump has complained repeatedly about the gap between the amount of goods US companies buy from China and the amount of goods that USA companies export to China.

"If you're going to take China on, you'd better make sure you've shored up your base with your allies and made sure you kept other markets open", said Michael Camunez, president of Monarch Global Strategies consultancy and a former U.S. Commerce Department official.

Duties ranging from 5 per cent to 25 per cent will be levied on 5,207 kinds of American imports if the USA delivers its proposed taxes on another US$200 billion of Chinese goods, the Ministry of Finance said in a statement on its website late Friday.

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Whether or not President Trump understands that the policies he has so far enacted will on balance explode the trade deficit is tough to say.

The fight over trade kicked off in March when Trump threatened to hit $50 billion worth of Chinese imports with a 25% tariff. China imported only about $130 billion in products from the USA previous year.

"Instead of escalating this trade war, the president should have serious negotiations with the Chinese to create lasting change".

"China's position remains clear and unchanged: blackmail and USA pressure against the PRC will never work", the diplomat said, answering the question on the issue.

Ms Erin Ennis, senior vice-president of the US-China Business Council, said a 10 per cent tariff on these products is already problematic, and 25 per cent would be much worse. The European Commission separately is considering a draft proposal to address some of the Trump administration's concerns and offer ways to fill gaps in WTO's 23-year-old rule book. The government will seek public comment on the higher tariffs.

Ed Bryztwa, director of worldwide trade at the American Chemistry Council, was especially concerned about the additional tariffs, even before the threat of more than doubling the tariff rate.

China upholds the use of dialogue to resolve disputes but equal treatment and keeping to promises are pre-requisites for dialogue, it said in a statement.

- Tariff increases from 10% to 25% follow CNY currency fall.

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