Monday, China raised tariffs on a paltry $60-B of U.S. goods in retaliation for President Trump’s decision to increase tariffs on $200-B worth of Chinese imports last week, escalating the 10 month trade dispute between the world’s 2 largest economies.
President Trump shook the world trade order by imposing unilateral tariffs to combat what he calls unfair trade practices by China, the EU and other major trading partners of the United States.
The bulk of President Trump’s tariffs have been aimed at China, covering $200-B+ worth of Chinese goods so far. He also has directed US Trade Representative Robert Lighthizer to launch the process of imposing tariffs on all remaining imports from China, another $325-B worth of goods.
The latest tariff increases mark an end to a 5-month+ truce after President Trump and Chinese President Xi agreed in December 2018 to negotiate an end to the dispute.
US TARIFFS ON CHINA
– 25% tariffs on $50-B worth of Chinese technology goods including machinery, semiconductors, autos, aircraft parts and intermediate electronics components imposed on 6 July and 23 August 2018 as part of “Section 301” probe into China’s intellectual property practices.
– 25% tariffs on $200-B worth of Chinese goods including computer modems and routers, printed circuit boards, chemicals, building materials and furniture. A 10% tariff on these goods was imposed on 24 September 2018 as a response to Chinese retaliation. President Trump increased the tariff rate to 25% on 10 May 2019 after accusing China of backtracking on earlier commitments in the talks.
– President Trump on 10 May also directed USTR to start a public comment process for imposing 25% tariffs on remaining Chinese imports. This $325-B category of goods will hit consumer products hard, including cell phones, computers, clothing, toys and other consumer products.
CHINESE TARIFFS ON UNITED STATES
– China on 13 May announced it would increase tariffs on a revised list of 5,140 US products, worth about $60-B. The additional tariff of 25% will be levied on 2,493 products, including liquefied natural gas, soy oil, peanut oil, petrochemicals, frozen minerals, sable brushes, and cosmetics. Some other products will see tariffs of 5%-20%
– 25% tariffs on $50-B worth of US goods including soybeans, beef, pork, seafood, vegetables, whiskey, ethanol, imposed on 6 July 2018 and 23 August 2018 in retaliation for initial rounds of US tariffs. China had suspended a 25% duty on US auto imports during their trade negotiations. Beijing has resumed some purchases of US soybeans but has not formally suspended those tariffs.
– Based on 2018 US Census Bureau trade data, China would only have about $10-B in US imports left to levy in retaliation for any future US tariffs. Retaliation could come in other forms, such as increased regulatory hurdles for US companies doing business in China.
Stay tuned for the next installment of this article, when I explore the US Global tariffs in place and pending.