Published: Tue, September 18, 2018
Money | By Ralph Mccoy

US President Donald Trump's $200b tariffs to hit China, retaliation expected

US President Donald Trump's $200b tariffs to hit China, retaliation expected

The US is already engaged in a trade war with China and is expected to levy new tariffs on $200 billion worth of Chinese goods as soon as Monday, on top of the tariffs in place on more than $50 billion worth of Chinese goods.

Multiple reports in recent days cited officials saying Trump had made a decision to press ahead with new tariffs, but at a lower rate of 10 percent after initially announcing they should be hiked to 25 percent in light of China's alleged intransigence.

The week started with early morning tweets from Trump claiming the cost increases due to the tariff spat have been "unnoticeable" and any country not making fair deals will be "tariffed".

China has already imposed retaliatory tariffs on $50 billion worth of USA goods in response to Washington's previous measures.

The iPhone was not among the "wide range" of products that Apple told regulators would be hit by the $200 billion round of tariffs in a 5 September comment letter to trade officials. This has raised concerns that China could retaliate with non-tariff trade measures.

On the contrary, Trump has picked fights with each of those trading partners - from imposing tariffs on imported steel and aluminum to demanding that Mexico and China transform the North American Free Trade Agreement into a deal more favorable to the United States.

If the administration pursues what it calls "phase three" of the tariff strategy, it would raise the total value of affected Chinese goods to $517 billion - covering almost everything China sells the United States.

There had been hopes of a resolution on trade between the two, but news of the planned fresh United States tariffs has sparked anger in Beijing.

Trump's tariffs on China raise costs and create uncertainty for companies that have built supply chains that span the Pacific Ocean. "Once again, I urge China's leaders to take swift action to end their country's unfair trade practices". In retaliating, China in July announced tariffs on American agricultural goods and autos.

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"There is no disagreement between the Congress and the President that we must hold China accountable for hurting the USA companies and workers on a colossal scale by extorting our companies to transfer their best technology, stealing our intellectual property, and shoring up China's state-run companies through subsidies and other distortive practices", Brady said.

Before the latest announcement, 20% of total tonnage and trade value of the Los Angeles port was exposed to the tariffs and retaliatory charges.

"Lou Jiwei's approach would feed the most hawkish sentiments in the US government", the person said, declining to be identified given the sensitivity of the matter.

The officials said China had been given "chance after chance" to change the trade practices considered unfair to USA businesses, but "have remained obdurate".

While economists generally estimate that the overall economic impact of the tariffs will be a fraction of a percentage point, they caution that the effects are hard to predict.

There could be some short-term opportunities for New Zealand from the tariffs but the risks were greater, he said.

A second administration official told CNBC that the cost of these tariffs would amount to 10 percent of all imports targeted, down from earlier estimates of 25 percent. But, in doing so, they can't take actions that deliberately discriminate against other countries; actions that hurt American workers. In July, 25 percent tariffs on bearings and some Global Positioning System units took effect, and in August, Chinese-made e-bikes and e-bike motors were hit with a 25 percent tariff.

"The escalating US-China trade war will further weigh on Chinese export orders and business sentiment, particularly if no trade deal can be reached by the end of 2018", said Rajiv Biswas, Asia Pacific chief economist at IHS Markit in Singapore. "And they can't take actions that entirely flout the rules of the worldwide trading system", the official said. Officials said the United States would continue trade negotiations only if the Chinese were "serious" about giving ground on those issues.

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