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Possible new US tariffs not 'cataclysmic', says Ross

Commerce Secretary says 25% tariff on US$200b of goods will amount to US$50b, less than 1% of China's economy


NEW tariffs that the United States is threatening to impose on nearly half the goods imported from China would have a small impact on the Asian nation's economy and not lead to disaster, Commerce Secretary Wilbur Ross said on Thursday, as US financial markets were set to open lower on the trade stand-off.

"It's not something that's going to be cataclysmic," he said in an interview with Fox Business News, explaining that a 25 per cent tariff on US$200 billion of goods would amount to only US$50 billion a year, equal to less than one per cent of China's economy.

Mr Ross said that US President Donald Trump "now feels that it's potentially time to put more pressure on" China to "modify their behaviour". Trade Representative Robert Lighthizer said on Wednesday that Mr Trump directed the increase from a previously proposed 10 per cent duty because China had refused to meet US demands and had imposed retaliatory tariffs on US goods.

Mr Trump's threats of higher tariffs also weighed on China's financial markets. But Wang Yi, the Chinese government's top diplomat, said that US efforts to pressure China would be in vain, urging its trade policymakers to "calm down".

"We hope that those directly involved in the United States' trade policies can calm down, carefully listen to the voices of US consumers . . . and hear the collective call of the international community," Mr Wang, a member of the country's state council, or cabinet, said in Singapore.

"The United States' method of adding pressure will not, I'm afraid, have any effect," he told reporters on the sidelines of a regional forum.

Worsening trade tension between the two countries would not affect China's stance on the denuclearisation of the Korean peninsula, Mr Wang said. "We deal with diplomatic matters on the basis of principle, not by engaging in trade."

The Chinese yuan also ticked lower against the US dollar, extending its year-to-date decline to more than 4.5 per cent.

There have been no formal talks between Washington and Beijing for weeks over Mr Trump's demands that China make fundamental changes to its policies on intellectual property protection, technology transfers and subsidies for high technology industries.

Foreign Ministry spokesman Geng Shuang reiterated at a regular news briefing in Beijing that the United States' efforts at "blackmail" would fail. "We would advise the United States to correct its attitude and not try to engage in blackmail. This won't work on China," he said.

"Secondly, we would advise the US side to return to reason, and not blindly let emotions affect their decisions, because in the end, this will harm themselves."

Two Trump administration officials told reporters on a conference call that Mr Trump remains open to communications with Beijing and that through informal conversations the two countries are discussing whether a "fruitful negotiation" is possible.

China's commerce ministry said that the US tactics would have no effect on China, and would disappoint countries that are against trade wars.

"China is fully prepared for the United States' threats to escalate the two countries' trade war, and will have to fight back to defend its dignity and the interests of its people," it said in a statement posted on its website.

Mr Trump has ultimately threatened tariffs on more than US$500 billion in Chinese goods, covering virtually all US imports from China.

The office of the US Trade Representative (USTR) said that it will extend a public comment period for the US$200 billion list to Sept 5 from Aug 30 due to the possible tariff rate rise. The list, unveiled on July 10, hits American consumers harder than previous rounds, with targeted goods ranging from Chinese tilapia fish and dog food to furniture, lighting products, printed circuit boards and building materials. REUTERS