China Trade War Escalates as New Tariffs Kick In

Devin Lawrence
August 24, 2018

That figure would be far more than China imports from the United States, raising concerns that Beijing could consider other forms of retaliation, such as making life more hard for American firms in China or allowing its yuan currency to weaken further to support its exporters.

Beijing denies Washington's allegations and insists it adheres to WTO rules.

Mr Trump has threatened to impose duties on virtually all of the more than US$500 billion of Chinese goods exported annually to the United States unless Beijing agrees to sweeping changes to its intellectual property practices, industrial subsidy programmes and tariff structure.

Meanwhile, a Reuters poll of more than 100 economists shows that a lot of them expect economic growth to slow over the next two quarters as the boost created by last year's tax cuts fades and Americans begin to feel the costs of the tariffs.

Trump, who has threatened to target all $500 billion in goods the USA imports from China, has made that same point, noting that Beijing can not continue to retaliate in kind since it imports less than $200 billion a year in American goods. The office of the US Trade Representative is looking into 25 percent duties on another $200 billion in goods, with hearings underway this week.

Mr. Trump said last month he's ready to hit all goods imported from China with tariffs.

U.S. Treasury officials have been working on a revised list of American demands in the lead-up to this week's meetings, according to people familiar with the U.S. preparations.

The administration already was forced to announce a $12bn aid programme for farmers hurt by the trade wars, as U.S. agricultural products, like soybeans, were an easy target for China and others.

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Even as China and the US trade tariffs, a Chinese delegation meeting with their American counterparts for trade talks this week in Washington, D.C. And a Chinese foreign ministry spokesperson expressed guarded optimism about how they're going. However, US President Donald Trump said he wasn't expecting much from this week's negotiations. China has said its own tariffs on a list of US$16 billion worth of imports from the United States would be effective at 12.01pm local time.

Chinese authorities have said they will take "comprehensive measures", which companies worry could mean targeting operations of American businesses in China for disruption.

China has filed a complaint to the World Trade Organisation against the latest tariffs, the country's Commerce Ministry said yesterday, and will "continue to take necessary countermeasures".

A spokeswoman at China's embassy in Washington could not immediately be reached for comment.

The dispute centres around Mr Trump's demand for Beijing to drop its protectionist economic stance and buy more USA goods.

In an interview with the business channel CNBC, he said, "I'm willing to go to 500", referring roughly to the $505.5 billion in goods imported past year from China.

This week's talks are also taking place as hundreds of executives and officials from USA companies, trade groups and other entities have descended on Washington to weigh in on the administration's planned tariffs on the additional US$200 billion in Chinese imports.

"The gulf between the Trump administration and the Chinese is as wide as the Pacific, and it looks like it's getting wider". China's retaliatory tariffs apply to USA goods including coal, petrol, vehicles, motorcycles and medical equipment.

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