China\u2019s in-kind response to U. S. President Donald Trump\u2019s announcement of tariffs on $50 billion of imports from the nation left the global economy on the verge of a trade war.<\/b>
\nChina\u2019s in-kind response to U. S. President Donald Trump\u2019s announcement of tariffs on $50 billion of imports from the nation left the global economy on the verge of a trade war.
Two detailed lists of products on which tariffs will be collected starting July 6 now form the core of the conflict between the world\u2019s two largest economies: One released Friday aimed at curbing China\u2019s industrial advancement and the other aimed at hurting the commodity producers of the American heartland.
China\u2019s response, released in detail early Saturday, now raises the prospect the U. S. will impose more duties following a pledge from Trump on Friday. For now, weeks of shuttle diplomacy between Washington and Beijing, in an effort to reduce China\u2019s massive goods trade surplus with the U. S., have produced nothing — and the very products that China had pledged to buy more of will now be slapped with higher import duties instead.
\u201cThere is very little chance that this three-week delay to July 6 will allow for a last-ditch effort to avert tariffs,\u201d said economists including Michael Hirson, Asia director at Eurasia Group in New York. \u201cA first round of tariffs on $50 billion in goods is locked in and the risk of escalation to a second round is considerable.\u201d
The U. S. Trade Representative\u2019s final list includes 1,102 product lines, down from about 1,300 initially, mainly focused on China\u2019s Made In 2025 plan to become dominant in high-technology industries such as robotics, aerospace, industrial machinery and automobiles. Consumer goods including mobile phones and televisions aren\u2019t being subjected to the tariffs.
Hours after the U. S. announcement — China\u2019s Finance Ministry issued a list of 545 product categories, also covering about $34 billion in exports from the U. S., to be subject to an additional 25 percent tariff starting July 6. They included a variety of agricultural products, including soybeans, corn and wheat along with beef, pork and poultry, plus automobiles. A second set of tariffs to begin at a later date covered other goods including coal, crude oil, gasoline and medical equipment.
The U. S. imported $506 billion of goods from China last year and exported about $130 billion, leaving a 2017 deficit of $376 billion, according to government figures.
Experts panned Trump\u2019s strategy of using tariffs to attempt to curb China\u2019s manufacturing rise. While the USTR list does target exports of Chinese goods that are the building blocks to becoming an advanced industrial power, there\u2019s little evidence that the tariffs will have enough effect to prevent the nation moving into more advanced fields.
\u201cThe mentality of the Trump team is a little strange,\u201d said Andrew Polk, co-founder of research firm Trivium China in Beijing. \u201cThey\u2019re saying, \u2018We\u2019re going to tax exports from China where they want to be a global superpower,\u2019 he said.
\u201cA much more powerful way to stop China from moving up the value chain is to stop selling them semiconductors,\u201d Polk added.
China has leverage over key exports from U. S. states that voted for Trump in 2016. In April, the Asian nation started levying additional taxes on American fruit, nuts, pork and wine in response to Trump tariffs on steel and aluminum. Products affected include soy, corn, wheat, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables.
The Chinese list released Saturday covers almost all farm products imported from the U. S., said Li Qiang, chief analyst with Shanghai JC Intelligence Co. Ltd. \u201cGiven China\u2019s big trade surplus with the U. S., it will be more difficult and complicated for China\u201d in the future to retaliate if the Trump administration expands the tariffs to more products, said Li. The new list includes more agricultural produce, including dairy, alfalfa and seafood, than a initial group published in April.
Escalation looms. In April, Trump asked officials to consider an additional $100 billion in levies. Meanwhile, U. S. Trade Representative Robert Lighthizer said an announcement on U. S. investment restrictions on China will follow in the next two weeks.
Trump\u2019s tariffs may also influence his efforts to bring peace to the Korean peninsula following his summit with leader Kim Jong Un this week in Singapore. Beijing is an important player in talks with North Korea on abandoning its nuclear-weapons program.
\u201cWhile the end game is a compromise trade deal that meets U. S. demands for stronger Chinese protection of intellectual property rights, the road to a trade deal has become very ugly,\u201d said Rajiv Biswas, APAC chief economist at IHS Markit in Singapore. \u201cBoth U. S. and Chinese exporters will suffer considerable economic losses while these punitive tariffs are in place, and many Asian countries that are part of the Chinese manufacturing supply chain will also suffer collateral damage in this escalating trade war.\u201d<\/p>\n