China targets $3 billion of US goods in tariff dispute with Trump

Ann Santiago
March 25, 2018

"This can turn ugly on a global scale very quickly".

In a second step, a 25 percent tariff would be imposed on eight goods totalling almost $2 billion, including pork and aluminium scrap, after "further evaluating the impact of the USA measures on China", the statement said. Beijing said that it would impose a 15 percent tariff on goods like fresh fruit, nuts, wine and seamless steel pipes, and that it was considering a second round of levies, of 25 percent, on other goods, including aluminum.

Mr Trump on Friday ordered the US Trade Representative (USTR) to publish in 15 days a list of Chinese products it intends to target with tariffs. Trump said that the amount could be even bigger, at "about $60 billion".

While China is the world's largest steel producer, it accounts for less than one percent of USA imports and sells only 10 percent of its wrought aluminium overseas.

A broader concern is that, by acting unilaterally, the Trump administration is undermining the broader system that has facilitated the growth of worldwide trade and adjudicated grievances between countries since World War II.

Trump has also riled China by signing a new Taiwan Travel Act last Friday.

The proposed new tariffs from the US are to be submitted to President Trump in about two weeks. The typical consumer has about $260 in extra purchasing power as a result of trade with China.

The World Trade Organisation's (WTO) chief on Friday said both countries should show restraint and called on governments to settle their differences through the WTO's mechanisms.

Altogether, the USA trade representative estimates that these policies cost US businesses around $50 billion a year. "I think that's the game that's going on here, to try to get the other countries to play the same game we are, and push the problems back on the Chinese". "The list that China has announced appears to be a retaliation, but still it is very measured", said Li Yong, senior fellow of China Association of International Trade. He predicted tough talks ahead.

Another concern remains how Chinese President Xi Jinping himself will respond as he consolidates power. And the US demand for Chinese goods is expected to increase in the next few years as USA tax cuts boost growth and increase federal borrowing.

A United Kingdom government spokesperson said they welcomed the "signals" that the USA government was considering European Union wide exemptions for limited time period.

While far from ideal, organizations such as the WTO have limited the scope of trade wars since the chaos of the 1930s.

Electrical goods and tech are the largest USA import items from China.

Countries affected by the measures, like China, can under WTO rules retaliate with tariffs on USA goods worth a sum equivalent to the trading loss they would suffer from the US tariffs.

Even Trump's own Cabinet members admit that publicly, although they argue after years of quiet, civilized talks between the United States and China under Presidents George W. Bush and Barack Obama, it's time for aggressive action, especially over Chinese theft of US intellectual property.

"That the willing to risk these disruptions indicates how serious the U.S. Administration finds China's forced technology transfer, cyber theft, and discriminatory industrial policies", AmCham China Chairman William Zarit said in a statement.

"While we share the Administration's commitment to levelling the playing field for American workers and businesses, the ramifications of the tariffs for USA agriculture are particularly troubling".

China has assembled a list of 128 US products in total that could be targeted if the two countries are unable to reach an agreement on trade issues, the ministry said.

Cecilia Malmström said protectionism was being "used as a weapon to threaten and intimidate us".

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