China to Match $16 Billion U.S. Tariffs

August 8, 2018 12:48 PM
China confirmed that it will impose 25 percent tariffs on an additional $16 billion worth of imports from the U.S. from Aug. 23, matching an earlier move from Washington.

(Bloomberg) --

China confirmed that it will impose 25 percent tariffs on an additional $16 billion worth of imports from the U.S. from Aug. 23, matching an earlier move from Washington in another ratchet higher for the trade war between the two nations.

The U.S. decision to levy 25 percent tariffs on the same value of Chinese goods is "very unreasonable," and China will have to retaliate to protect its rightful interests and the multilateral trading system, China’s Ministry of Commerce said in a statement.

The tit-for-tat protectionist measures are poised to surge even higher, with the U.S. reviewing 10 percent duties on a further $200 billion in Chinese imports that it may even raise to 25 percent after a comment period ends on Sept. 6. Should the U.S. proceed with those tariffs, China’s ready to slap duties on an additional $60 billion of American goods.

"We’re not yet past the point of no return but we’re edging closer to it," said Wang Tao, head of China economic research at UBS AG in Hong Kong. "The risk is that the U.S. administration’s gamble to strong-arm China into giving into all U.S. demands without some compromise only leads to successive rounds of higher and higher tariffs."

All Imports

President Donald Trump has suggested he may tax effectively all imports of Chinese goods, which reached more than $500 billion last year. Reserve Bank of Australia Governor Philip Lowe Wednesday warned that escalation of the dispute could be "very damaging for the world economy."

China’s exports grew faster than expected in July, while imports surged, showing both domestic and international demand continue for now to shrug off the uncertainty of the trade conflict with the U.S. The world’s largest exporter, China is still benefiting from robust global demand even as increasing tensions and rising trade barriers with the U.S. weigh on the outlook.

The revised Chinese list released today added hundreds of new items to be hit with tariffs, and now covers items as diverse as coal, medical instruments, waste products, cars and buses. The tariffs will come into effect simultaneously with the U.S. ones, at 12:01 p.m. in Beijing, according to the statements.

The U.S. announced earlier this week that its own tariffs on $16 billion of Chinese goods would start on Aug. 23. U.S Customs will begin collecting duties on 279 product lines ranging from motorcycles to steam turbines and railway cars, the U.S. Trade Representative’s Office said in an emailed statement on Tuesday.

The U.S. had already levied 25 percent duties on $34 billion in Chinese goods on July 6, prompting swift in-kind retaliation from Beijing. At the weekend, Trump said he had the upper hand in the trade war, while Beijing responded through state media by saying it was ready to endure the economic fallout.

A U.S.-China trade war will reduce global output by 0.7 percent by 2020, with China’s economy taking a 1.3 percent hit and U.S. GDP dropping 1 percent, Oxford Economics said in a research note Tuesday, before the new list was released. While there’s no major risk of the world lapsing into “damaging stagflation,” the possibility remains of a “bigger blow-up” that sharply reduces trade, as in the 1930s, it said.


Copyright 2018, Bloomberg

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Spell Check

bad axe, MI
8/9/2018 06:26 AM

  I still can't understand why the farmer can't figure out there is no place for him in the world economy with the USA having 71 trillion in credit market debt. Trump wants to take it to 84 trillion by 2022. You look at how much this farm economy changed since last October when the IMF and The World Bank let China in as a world reserve currency. The US farm sector has to much asset inflation to compete abroad .

Eddie Einter
Gibson, IL
8/8/2018 05:12 PM

  Let's tell China they can keep all the products they sell us. We don't need them.

Lubbock , TX
8/9/2018 08:32 PM

  Great plan Eddie. Give up your cell phone, your auto & most of you clothes. See how that works. Meanwhile China will buy corn, soybeans, milo, pork, beef & chicken from any number of other countries. What are you going to do post bankruptcy? Maybe the idiot you elected POTUS will help you out. After all, he knows a lot about bankruptcy but apparently nothing about trade.