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Retaliatory tariffs put almost all of China exports to US on the line
CHINA on Tuesday announced it will take retaliatory tariff action against US$60 billion of US goods, sharply escalating the trade war as the Trump administration considers imposing duties on virtually all Chinese imports.
China's retaliatory tariffs, ranging from 5 per cent to 10 per cent on more than 5,000 items including items ranging from meat to wheat and textiles, will take effect on Sept 24, China's Ministry of Finance said in a statement posted on its website. Beijing is still ready to negotiate an end to the trade tensions, it said.
President Donald Trump also said "we will immediately pursue phase three, which is tariffs on approximately US$267 billion of additional imports" if China targets politically potent US agricultural products for retaliation.
Mr Trump had said on Twitter that "China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me... What China does not understand is that these people are great patriots and fully understand that."
In an announcement on Monday US time, Mr Trump ordered his administration to levy 10 per cent tariffs on about US$200 billion in Chinese goods on Sept 24 and to more than double the rate in January if Beijing refuses to offer trade concessions. The latest round of duties comes on top of a 25 per cent tariff already imposed on about US$50 billion in Chinese goods.
The president said the US will immediately pursue additional tariffs on another US$267 billion of Chinese imports if Beijing hits back against the US$200 billion round.
Beijing responded by saying it has no choice but to retaliate against the new US trade tariffs, risking even stronger action from Mr Trump in an escalation of the trade war between the world's largest economies.
"To protect its legitimate rights and interests and order in international free trade, China is left with no choice but to retaliate simultaneously," the Commerce Ministry said in a brief statement.
"The United States insists on increasing tariffs, bringing new uncertainties to bilateral trade negotiations. China hopes the United States would recognise the negative consequences of its actions, and take convincing steps to correct its behaviour in a timely manner."
The latest US duties spared smart watches from Apple and Fitbit and other consumer products such as baby car seats.
But if the administration enacts the additional tariffs, it would engulf all remaining US imports from China and Apple products like the iPhone and its competitors would likely not be spared.
Last month, China unveiled a proposed list of tariffs on US$60 billion of US goods ranging from liquefied natural gas to certain types of aircraft - should Washington activate the tariffs on its US$200 billion list.
China is reviewing plans to send a delegation to Washington for fresh talks in light of the US decision, the South China Morning Post reported on Tuesday, citing a government source in Beijing.
US trade actions against China will not work as China has ample fiscal and monetary policy tools to cope with the impact, a senior securities market official said.
"President Trump is a hard-hitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations," said Fang Xinghai, vice-chairman of China's securities regulator, at a conference in Tianjin. "I think that kind of tactic is not going to work with China."
Collection of tariffs on the long-anticipated US list will start on Sept 24, but the rate will increase to 25 per cent by the end of 2018, allowing US companies some time to adjust their supply chains to alternate countries.
So far, the US has imposed tariffs on US$50 billion worth of Chinese products to pressure Beijing to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. China has retaliated in kind.
Mr Trump's latest escalation of tariffs on China comes after several meetings yielded no progress.
US Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but nothing has been scheduled as yet.
Mr Trump said in his statement: "We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But so far, China has been unwilling to change its practices."
Mr Fang told the Tianjin forum that he hopes the two sides can sit down and talk, but added that the latest US move has "poisoned" the atmosphere.
A senior Trump administration official told reporters that the US was open to further talks with Beijing, but offered no immediate details on when they may occur.
"Tensions in the global economic system have manifested themselves in the US-China trade war, which is now seriously disrupting global supply chains," the European Union Chamber of Commerce in China said in a statement on Tuesday.
The yuan has weakened by about 6 per cent against the US dollar since mid-June, offsetting the 10 per cent tariff rate by a considerable margin.
The US Trade Representative's office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories.
The adjustments did little to appease technology and retail groups, who argued that US consumers would feel the pain.
"President Trump's decision...is reckless and will create lasting harm to communities across the country," said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.
"Tariffs are a tax on American families," said Hun Quach, RILA vice-president for international trade (RILA is the Retail Industry Leaders Association).
Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, said: "Consumers - not China - will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen." He said three-quarters of its members will be hit by the tariffs, and they will not bring jobs back to the US.
"Most of our member companies are 'in China, for China' - selling goods to Chinese companies and consumers, not to Americans - and thus ultimately boosting the US economy." BLOOMBERG, REUTERS