China retaliates with 25% import duty on $50-bn worth of US goods
04 April 2018
China has hit back at America with new tariffs on 106 items of import in a tit-for-tat action after US President Donald Trump approved higher duties on up to $50 billion worth of Chinese goods.
Beijing announced 25 per cent tariffs on US products, including frozen pork, soybeans, automobiles, chemicals and aircraft, hours after America rolled out fresh tariffs on Chinese steel, aluminium and high-tech goods, worth an annual $50 billion.
China’s finance ministry had, on Sunday, announced a list of potential products that would be subject to the tariffs that take effect from Monday. These products matched a list of US goods China had, on 23 March, proposed to slap duties on (See: China hits back at Trump's imposition of tariffs on itsb products).
Two days earlier, China increased tariffs by up to 25 per cent on 128 US products, from frozen pork and wine to certain fruits and nuts, in what is seen as a beginning of a trade war between the world’s biggest economies (See:China responds to US steel tariff with duty hike on US pork, fruits).
The US tariff hike has “has seriously damaged our interests,” the finance ministry said in a statement.
“Our country advocates and supports the multilateral trading system,” it said. China’s tariff increase “is a proper measure adopted by our country using World Trade Organisation rules to protect our interests,” the statement said.
By targeting high-tech sectors that Beijing is openly trying to promote, the US is signalling that its strategic aim is to prevent China from gaining global technological leadership.
US officials on Tuesday specifically targeted product lines that the US Trade Representative’s office says benefit unfairly from Beijing’s industrial policies, including `Made in China 2025’ plan that aims to dominate key strategic technologies.
The step ratchets up tension in a brewing trade war between the world’s two largest trading nations. China, however, hasn’t said when these new tariffs on $50 billion of US imports will come into effect.
China’s response comes as a surprise for many as analysts had assumed that China would not respond too aggressively and avoid escalating tensions.
It looks more like a game of brinkmanship, making it clear what the cost would be, in the hope that both sides can come to agreement and none of these tariffs will come into force.
But, if both sides fail to back down, there will, however, soon be 25 per cent tariffs on $100bn of trade between the two countries.
The Trump administration’s latest offensive, which is based on alleged infringements of intellectual property in China, risks the start of a process of escalating tariffs that would lead to a sharp slowing in trade between the two countries.