China announces fresh tariffs on $75 billion of U.S. products

By Amanda Lee | South China Morning Post and Owen Churchill | South China Morning Post

This story is being published by POLITICO as part of a content partnership with the South China Morning Post. It first appeared on scmp.com on Aug. 23, 2019.

China announced on Friday it will go ahead with tariffs of as much as 10 percent on $75 billion worth of U.S. products in retaliation for President Donald Trump’s threats to impose new duties on Chinese imports next month, state media reported.

China said it would raise tariffs on items originating in the U.S. from 5 percent to 10 percent, and the new duties would be implemented in two batches — the first from Sept. 1 and the second from Dec. 15. The duties — announced and then suspended earlier this year — are in response to the U.S. government’s 10 percent tariff on $300 billion worth of Chinese goods.

According to the State Council’s Customs Tariff Commission, the extra tariffs will apply to goods including include soybeans, beef, pork and crude oil.

White House trade adviser Peter Navarro said China’s reaction was “well anticipated” but would only “strengthen the resolve of this president."

“And they signal once again to the American public that China wants to buckle our knee so that they can keep having their way with us,” Navarro, a driving force behind the administration’s tough line on Beijing, said on CNN.

The commission also said that 25 percent tariffs on American vehicles and car parts would take effect from Dec. 15, up from the 5 percent duties now in place for the products.

It said China decided to reimpose the tariffs because Washington’s planned increases “violated the consensus reached by the two heads of state in Argentina and the consensus reached in Osaka," referring to meetings between Trump and Chinese President Xi Jinping in December and June.

“China’s adoption of punitive tariff measures has been forced by the pressure of U.S. unilateralism and trade protectionism,” the commission said.

“The U.S. measures have led to the continuous escalation of China-U.S. economic and trade frictions, which have greatly harmed the interests of China, the U.S. and other countries, and have also seriously threatened the multilateral trading system and the principle of free trade,” state news agency Xinhua quoted the commission as saying.

Despite the tariffs, the commission said China still aimed for a “win-win” outcome in its disputes with the U.S.

“We hope China and the United States will resolve differences in a manner acceptable to both sides on the premise of mutual respect, equality, good faith, and consistency of words and deeds,” it said.

“The two sides are expected to actively build a new balanced, inclusive and win-win China-U.S. economic and trade order, jointly safeguard, reform and improve the multilateral trading system, and promote win-win cooperation with other countries in the world,” it said.

On Thursday, China’s Ministry of Commerce said the central government would have to take countermeasures to safeguard its own interests if the U.S. imposed the new tariffs on Chinese goods.

Washington has said it plans to impose the new tariffs in two batches from Sept. 1 and Dec. 15.

Beijing’s announcement came a day after White House economic adviser Larry Kudlow said deputy-level negotiators from the U.S. and China held a “very constructive” teleconference on Wednesday and that the U.S. was preparing for meetings in Washington in September.

“The deputies’ call was quite constructive and this may lead to a meeting of the principals here in Washington,” Kudlow said, adding that the deputies had agreed to another conference call.

It was not immediately clear if the tariffs announcement would have any impact on the planned trade talks.

Tension between China and the US has further escalated this week with Trump’s approval of the sale of 66 F-16V, or “Viper," jets to Taiwan in a US$8 billion deal, with Beijing threatening to retaliate.

Chen Qi, a resident scholar specializing in U.S.-China relations at the Carnegie-Tsinghua Center for Global Policy, a Beijing-based policy think tank, said he was not surprised by the latest tariffs as recent events had further damaged relations between the world’s two biggest economies.

Earlier this month, the U.S. Treasury Department called out China as a currency manipulator, accusing Beijing of devaluing its currency to gain unfair advantage. China denied that it had manipulated the yuan, arguing that “there is no such thing as currency manipulation." China’s central bank called the designation “wilful unilateral and protectionist behaviour."

On Wednesday, Trump boasted that he was “the chosen one” to take on China in the trade war and he was going to win.

“The tension has now spilled over to finance and national security,” Chen said. “I doubt the tension [between China and U.S.] will calm down, perhaps [not unless] the two leaders meet in Chile in November,” he said referring to the Apec summit in Santiago.

But Chen was not hopeful of a fundamental improvement in relations until the next presidential election in the U.S.

“Right now, it shows that there is nothing that can halt further deterioration,” he said.