The trade war between the world’s two largest economies entered a new phase on Sunday, as US tariffs targeting Chinese-made products and Beijing’s retaliatory hikes on American imports both kick in.
Washington introduced 15 percent tariffs, hiked from the previous 10 percent, at 12:01 am EDT (04:01 GMT) on the first day of September. It is the first portion of tariffs targeting a combined total of $300 billion-worth of Chinese goods threatened by Washington, with another batch scheduled for December 15. Separately, the US will rise the existing 25 percent tariff on $250 billion-worth of Chinese products to 30 percent, starting next month.
The 122-page list, effective from September 1, covers a wide range of products –and, notably, many everyday household items– worth between $112 billion and $150 billion, according to various estimates.
But with prices of many retail goods now likely to rise, the Trump administration’s move threatens the U.S. economy’s main driver: consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.
As a result of Trump’s higher tariffs, many U.S. companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.
For example, the targeted items include suits, jackets, skirts, shirts among other different clothing and accessories, as well as a wide range of footwear. The American Apparel and Footwear Association has said that more than 90 percent of apparel, nearly 70 percent of home textiles and more than half of footwear imports from China will be affected by the levies that come into effect on Sunday.
The tariff hikes will also affect goods for babies, such as diapers and pacifiers, as well as TV panels, coffee, whiskey, dairy products, meat, cheeses and textbooks.
The latest tariff hike is feared to be a painful blow to American businesses, which cannot absorb all the levies and, subsequently, will hurt consumers, who will eventually bear the cost of the tariffs. Even before US President Donald Trump announced a five percent increase in tariffs last week, Wall Street major JPMorgan Chase warned that the hiked duties would cost the average American household roughly $1,000-a-year.
Various industry associations have already cried foul against Trump’s tariffs. Most of them, including US-based footwear companies, the National Retail Federation and the American Chamber of Commerce (AmCham) in China, have warned that retailers will be forced to raise prices and have stressed that the tariffs would thus hit average American families hard.
Even more tariffs loom on the horizon. On Dec. 15, the Trump administration is scheduled to impose a second round of 15 percent tariffs — this time on roughly $160 billion of imports. If those duties take effect, virtually all goods imported from China will be covered, including all major Apple products.
In China, authorities began charging higher duties on American imports at midday Sunday, according to employees who answered the phone at customs offices in Beijing and the southern port of Guangzhou.
The move came even though China signaled last week it was seeking a “calm” end to its ongoing trade war with the U.S., as Asian markets crumbled and China’s currency plummeted to an 11-year low.
Tariffs of 10 percent and 5 percent apply to items ranging from frozen sweet corn and pork liver to marble and bicycle tires, the Chinese government announced earlier.