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Trump sees gain in China tariffs despite consumer pain

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The Trump administration said it needs to confront China over its trading practices to defend US long-term interests even as escalating tariffs cause discomfort for American consumers.

[WASHINGTON] The Trump administration said it needs to confront China over its trading practices to defend US long-term interests even as escalating tariffs cause discomfort for American consumers.

Inaction by the US would leave the American economy and consumers worse off over the longer run, a senior administration official told reporters at a briefing on Friday, speaking on the condition of anonymity.

US industry has widely pushed back against the Trump administration's use of tariffs to force changes to China's economy, and companies from Gap to Samsonite International have said they're prepared to raise prices if the new tariffs bite into their business.

Mr Trump's biggest strike yet in a growing trade fight between the world's biggest economies will see a 10 per cent duty applied to US$200 billion of Chinese imports on Monday, which could rise to 25 per cent next year. He's threatened duties on a further US$267 billion of made-in-China goods, which would hit nearly all other consumer products including mobile phones, shoes and clothes.

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The latest round of duties comes on top of a 25 per cent tariff already imposed on about US$50 billion in Chinese goods, which spurred counter-tariffs from Beijing. China plans to retaliate on the US's US$200 billion tariff round by slapping levies on US$60 billion of American goods.

‘Pinching Pennies'

"The new US$200 billion of US tariffs on Chinese goods, mostly consumer-oriented, will depress spending and hurt the retail sector beginning in 2019," Seema Shah and Danielle McIntee, analysts with Bloomberg Intelligence, wrote in a note on Friday. "Lower-income families, already pinching pennies, are most exposed, given the likelihood of tariff-related price increases on everyday items."

The US is monitoring plans for Chinese retaliation to the US$200 billion round of levies, but it has nothing to announce yet on a further round of duties, the official said.

Commerce Secretary Wilbur Ross earlier this week said the tariffs are spread over such a wide range of goods that Americans shouldn't notice price increases.

"We were trying to do things that were least intrusive on the consumer," Mr Ross said on CNBC on Tuesday. "We really went item-by-item trying to figure out what would accomplish the punitive purpose on China and yet with the least disruption in the US."

The US remains open to trade negotiations with China but there's no scheduled meetings at the moment, the official said. Treasury Secretary Steven Mnuchin has extended an invitation to resume trade talks with his Chinese counterparts. The Asian nation had said they'd refuse to negotiate if the Trump administration followed through with the US$200 billion tariff round.

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