Trump threatens tariffs on $200B in Chinese goods

June 19, 2018 - On Tuesday, U.S. President Donald Trump expanded his plan to impose tariffs on Chinese goods, increasing the stakes in an emerging trade war with Beijing. In his latest warning, Trump threatened to implement a 10 percent tariff on Chinese imports worth $200 billion, an addition to his administration's new 25 percent tariff on $50 billion worth of Chinese goods. Taken together, the two measures would raise the effective price on nearly half of all imports from China into the U.S.

On Friday, after the Trump administration's first tariff action, Beijing responded with reciprocal tariffs on $50 billion in U.S. goods, including cars, soybeans, dairy, oil, propane and other high-value trade categories. On Monday, Trump responded with another round of tariffs. 

"China apparently has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology. Rather than altering those practices, it is now threatening United States companies, workers, and farmers who have done nothing wrong," Trump said in a statement. "Therefore, today, I directed the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent."

Trump warned that these additional tariffs would take effect if Beijing put its reciprocal trade measures into effect, or if it failed to reform its polices on intellectual property. In addition, he warned, he would seek tariffs on yet another $200 billion in Chinese goods if Beijing increased its tariffs again.  

Given the imbalance in American and Chinese trade, Beijing has a more limited set of options for adding to its list of tariffs. However, analysts warned, it does have significant leverage over American companies in China. “While President Trump announced that his team is working on plans to impose 10 percent tariffs on $200 billion worth of Chinese exports to the U.S., the big question is whether China will retaliate beyond trade and target U.S. business interests in China,” said Deutsche Bank China Chief Economist Zhiwei Zhang in a statement. He noted that China’s Ministry of Commerce has already promised to retaliate with "comprehensive quantitative and qualitative measures" if the U.S. imposes more tariffs.

The new U.S. tariffs would have a measurable effect on Chinese GDP growth - about 0.3 percent - and on U.S. consumers, Deutsche Bank predicted. While the previous round took aim at Chinese industrial and commercial goods, an additional round of $200 billion in targeted tariffs would likely affect high-value consumer goods like shoes, furniture and consumer electronics. 

Source: Maritime Executive