Trump's tariffs: What they are and how China is responding
WASHINGTON — President Donald Trump just imposed tariffs on hundreds of Chinese products — from X-ray tubes to incinerators. And Beijing is striking back by targeting U.S. soybeans, beef, seafood and other products.
The punch-and-counterpunch announced Friday in Washington and Beijing moved the world's two largest economies perilously near a trade war that would inflate prices for consumers, disrupt the flow of goods and perhaps slow a global economy that has been enjoying its healthiest expansion in a decade.
"Everybody loses in a trade war," says Philip Levy, senior fellow at the Chicago Council on Global Affairs and a former White House economic adviser. "You get consumers who are worse off. You get producers who are worse off, farmers who are worse off and you don't even achieve your goal."
What's more, the China tariffs come just as the United States is sparring with close allies like the European Union, Canada and Mexico in a separate conflict over trade in steel and aluminum.
WHAT DID TRUMP DO?
The White House on Friday announced plans to slap 25 percent tariffs on more than 1,100 Chinese products, worth $50 billion a year in imports. The administration had originally proposed the tariffs in April, starting with a list of 1,333 Chinese products lines. After receiving public feedback, it removed 515 from the blacklist and added 284 others.
Starting July 6, the U.S. will tax the 818 products, worth $34 billion a year in imports, that remained from the original list. It won't target the 284 additions, worth $16 billion, until after it collects public feedback.
HOW IS CHINA RESPONDING?
Beijing immediately said it would retaliate with penalties of the same scale on American goods — and it spelled out details to impose tariffs on 545 U.S. exports, including farm products, autos and seafood.
"The Chinese side doesn't want to fight a trade war, but facing the shortsightedness of the U.S. side, China has to fight back strongly," the Chinese Commerce Ministry said in a statement. "We will immediately introduce the same scale and equal taxation measures, and all economic and trade achievements reached by the two sides will be invalidated."
American soybean farmers, who send about 60 percent of their exports China, are especially worried about Beijing's retaliation. Soybean prices were already falling before Friday's announcement.
Prices will likely drop further should the tariffs be imposed," says Bill Shipley, president of the Iowa Soybean Association. "This will further pressure agricultural families and businesses already struggling with below break-even commodity prices."
HOW WILL CONSUMERS AND BUSINESSES BE AFFECTED?
Tariffs are a tax. So they drive up the price of targeted imports. The reduced foreign competition means that domestic producers can raise their prices, too.
The Trump administration has sought to protect consumers from a direct impact from the tariffs. The tariffs target mainly Chinese industrial machinery, aerospace parts and communications technology; they spare such consumer goods as smartphones, toys and clothes that Americans purchase by the truckload from China. Televisions and pharmaceuticals were removed from the original tariff list.
Still, these tariffs will impose higher costs on U.S. companies that use the equipment. And over time, those costs could be passed on to consumers. The impact won't be as visible as it would be if consumer products were taxed directly.
By contrast, the Trump administration earlier this year imposed steep tariffs on imported washing machines. By May, the cost of laundry equipment had jumped 17 percent from two months earlier, according to government data.
WHAT'S THE DISPUTE ABOUT?
The United States accuses China of using predatory tactics in a breakneck effort to supplant American technological supremacy. Among these are outright cyber-theft. Beijing forces U.S. and other foreign companies to hand over technology as a price of admission to the vast Chinese market. And it uses Chinese government money to outbid private companies for U.S. technology at above-market prices.
U.S. officials say they fear that Beijing's long-range development strategy, dubbed "Made in China 2025," will hamper competition and hurt American competitors. It calls for creating Chinese global competitors in such areas as information technology, robotics, aerospace equipment, maritime engineering equipment, electric vehicles, biopharmaceuticals and medical devices.
Foreign business groups have complained for a decade that Beijing is squeezing them out of promising economic fields. They say "Made in China 2025" appears to leave them little or no place in those industries.
But it isn't always clear whether the United States is seeking to curb China's sharp-elbowed practices or to keep it from emerging as a legitimate rival.
HAVEN'T THE 2 NATIONS TRIED TO WORK THINGS OUT?
Yes. And for a time last month it looked as if they'd reached a truce. After a meeting in Washington, Treasury Secretary Steven Mnuchin declared the trade war "on hold" and the tariffs suspended. Mnuchin said so after China pledged to buy more from the U.S., especially energy and agricultural products and to shrink America's gaping trade gap with China — $336 billion last year. But critics dismissed that agreement as vague. And Trump backed away and returned to the tariff threat.
Erin Ennis of the U.S.-China Business Council says she suspects Beijing will wait to see whether the United States actually puts the U.S. tariffs into effect July 6 before it starts taxing U.S. goods. That could buy time for last-ditch negotiations.
ISN'T THE U.S. TIED UP IN OTHER TRADE DISPUTES?
Oh, yes. Trump just enraged the EU, Canada and Mexico by imposing tariffs on imported steel and aluminum. Worse, he argued that the imported metals posed a threat to U.S. national security — an insult to the longstanding American allies that they roundly rejected. He has also threatened to tax auto imports, also on national security grounds.
Critics say Trump's decision to pick fights with America's friends weakens his hand against China.
Trade analysts say it would be wiser for the United States to enlist its allies to challenge China's drive to grab technology, rather than go it alone with unilateral tariffs. After all, companies from the advanced economies of the U.S., Europe and Japan share the same gripes.
China is adept at playing countries and companies off against one another, Jennifer Hillman, a Georgetown University law professor, testified last week before the U.S.-China Economic and Security Commission. If one complains, China can lock it out of the market and do business with a more compliant competitor. Better to present a united front.
US President Donald Trump says North American neighbors Canada and Mexico will get no relief from his new tariffs on steel and aluminum imports unless a "new and fair" free trade agreement is signed.
The Trump administration says the tariffs are necessary to preserve the American industries—and that doing so is a national security imperative. But Trump's latest tweets suggest he's also using the upcoming tariffs as leverage in ongoing talks to revise the North American Free Trade Agreement. The latest round of a nearly year-long renegotiation effort is concluding this week in Mexico City. — Associated Press
The United States and China spar over trade issues but promise to keep lines of communication open as Beijing's commerce minister paid a rare visit after a period of soaring tensions.
Minister Wang Wentao met US Trade Representative Katherine Tai on the sidelines of an Asia-Pacific Economic Cooperation trade meeting in Detroit, a day after he saw his counterpart Gina Raimondo in Washington.
Tai "discussed the importance of the US-China trade relationship in the global economy and the need for both sides to continue engaging with one another," her office says in a statement. — AFP
The United States is not looking for a new deal in its negotiations with China over trading practices but rather to address practices by Beijing that it finds objectionable, Washington's trade chief says Thursday.
US Trade Representative Katherine Tai (USTR) is pursuing talks with Beijing over the "phase one" trade agreement the countries signed two years ago, under which China committed to buying $200 billion in American goods through 2021 in exchange for relief from tariffs imposed by then-president Donald Trump.
Tai, who was appointed after President Joe Biden took office last year, tells the Senate Finance Committee her talks with Beijing on its adherence to the deal have been "very difficult."
"I think that we're not necessarily looking at another deal in the next phase, but to expanding out our focus on China's challenges beyond its commitments and compliance in phase one to the issues that were not captured by phase one," she says. — AFP
Trade relations between Washington and Beijing are at a "difficult" stage but President Biden's administration is committed to protecting the US economy from negative impacts of China's policies, the top American trade official says.
United States Trade Representative Katherine Tai says her team will "engage robustly" with China in ongoing talks over Beijing's commitments to buy American goods under a deal signed under former president Donald Trump.
"We're in a very difficult stage of this trade relationship," Tai says, adding that "the conversations are not easy." — AFP
China hails a WTO decision allowing it to slap duties on $645 million worth of US imports each year, calling on Washington to follow the ruling and "stop seeking excuses" in a long-running anti-dumping dispute.
But the move by the World Trade Organization does not mean China will automatically impose the tariffs and Beijing stopped short Thursday of announcing any fresh duties.
"We hope the US stops seeking excuses and takes immediate action to correct its wrongdoing in the trade remedy investigation against China," commerce ministry spokesman Gao Feng says.
"The WTO ruling once again proves that the US has long violated WTO rules, abused trade remedy measures, and refused to fulfil its international obligations." — AFP
President Joe Biden says his administration is working on removing tariffs on Chinese goods imposed by his predecessor, but Beijing will have to do more to meet its trade commitments.
"We're not there yet," Biden tells reporters when asked about the prospect of ending the tariffs.
At a press conference ahead of the first anniversary of his inauguration, Biden says US Trade Representative Katherine Tai is working on the issue with China but the timing is "uncertain." — AFP
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