China to put 25% tariffs on $16 billion worth of USA products

Devin Lawrence
August 8, 2018

"Looking ahead, we expect export growth to cool in the coming months, though this will primarily reflect softer global growth rather than U.S. tariffs, the direct impact of which will continue to be mostly offset by the renminbi's (yuan's) recent depreciation", Capital Economics' Senior China Economist Julian Evans-Pritchard wrote in a note.

A truck drives past shipping containers at a port in Lianyungang, Jiangsu province January 23, 2015.

"China conducts and supports cyber intrusions into USA commercial computer networks to gain unauthorised access to commercially valuable business information".

China is slapping additional tariffs of 25 percent on $16 billion worth of US imports from fuel and steel products to autos and medical equipment, the Chinese commerce ministry said, as the world's largest economies escalated their trade dispute.

The US is also considering further tariffs on another $200bn worth of Chinese goods which could come into effect in September.

Still, disagreements between the two major economic powers run deeper than just the trade balance and tensions remain over market access, intellectual property, technology transfer and investment.

China's surplus with the United States shrank marginally to $28.09 billion last month from a record $28.97 billion in June.

Although the move was expected, it cements the view that there appears to be no effort underway to defuse the dispute between the world's two largest economies that have continued to exchange threats.

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The government has responded by releasing more liquidity into the banking system, encouraging lending and promising a more "active" fiscal policy.

"With each successive round of tariffs, Trump continues to back China into a corner, forcing Beijing to respond in kind", said James Zimmerman, a partner in the Beijing office of global law firm Perkins Coie and a former chairman of the American Chamber of Commerce in China.

The world's top two economies have repeatedly sparred over trade in recent months, in what experts warn may become a devastating cycle of retaliation.

At the same time, Beijing reported a $28.1bn trade surplus with the U.S. in July, just below the record $28.9bn seen in June.

Economists had forecast the surplus would be $39.33 billion in July, compared to a surplus of $41.47 billion in June. On Tuesday, the administration said it had made a decision to go ahead with tariffs on 279 of the 284 items added in June; they're worth about $16 billion a year.

Washington already imposed 25 percent tariffs on $34 billion in Chinese products on July 6. In response, China has threatened up to 25 per cent tariffs on US$60 billion in American imports.

China, however, would run out of US imports to levy, as it bought only $130 billion worth of American goods previous year.

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