Published: Wed, September 19, 2018
Business | By Eloise Houston

China retaliates with tariffs on $60bn of USA goods

China retaliates with tariffs on $60bn of USA goods

In a second statement Tuesday morning, China announced it will retaliate with tariffs ranging from 5 to 10 percent on approximately $60 billion worth of USA imports.

Previously, US President Donald Trump threatened to hit those goods with 25 per cent tariffs immediately. All of the items in Lam's letter were included in the final list.

The latest U.S. move means roughly half of the products that China sells to the United States each year will be hit by American tariffs. It appealed for "pragmatic dialogue" to "jointly safeguard the principle of free trade and the multilateral trading system".

Economists at UBS Group AG say even a 10 percent tariff would slow the United States economy in the fourth quarter by enough to stop the Federal Reserve hiking interest rates again in December. That isn't a hypothetical-a boutique case maker called CaseLabs shut down in August, with its CEO claiming that tariffs helped raise their costs by 80 percent.

"Both countries should stay at the negotiating table, and the USA should continue working with its allies to seek alternative solutions", president and CEO Thomas Donohue said in a statement.

China's Commerce Ministry issued a statement Tuesday warning that it would respond to the new USA tariffs "to safeguard its legitimate rights and interests and the global free trade order".

In Beijing, China's foreign ministry has already vowed to strike back.

However, if Trump expands the tariffs to an additional $267 billion worth of goods then almost every Chinese import would be affected, including the iPhone, along with all other smart phones. Beijing retaliated with similar penalties on the same amount of American goods.

Beijing retaliated on Tuesday with tariffs on $60 billion of USA goods, prompting Trump to up the ante yet again, renewing a threat to slap taxes on another $267 billion of Chinese products. China has accused the United States of trade bullying and, to this point, has responded dollar-for-dollar with tariffs of its own. "No one will emerge victorious from this counter-productive cycle".

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China said it will retaliate if the United States goes ahead with these tariffs, and there is a risk it may cancel their upcoming trade talks. A recent Consumer Technology Association study estimated that tariffs on circuit board assemblies and connected devices could result in price increases of as much as 6%, costing overall American shoppers up to $3.2 billion extra each year.

China had previously said the $60 billion in U.S. goods would face tariffs of five to 25 percent.

Altogether about 300 product categories were given reprieves, including some non-tech consumer devices such as bicycle helmets and baby auto seats. "Once again, I urge China's leaders to take swift action to end their country's unfair trade practices".

China's retaliation only covered $60 billion as overall United States exports to China were about $187.5 billion against China's exports to America of $522.9 billion past year.

US Treasury Secretary Steven Mnuchin invited top Chinese officials to a new round of discussions last week, but no meeting has been scheduled. But Trump quickly backed away from the truce.

"Tariffs are a tax on American families, period", said Hun Quach, vice president for global trade from the Retail Industry Leaders Association (RILA). The tariffs focused on industrial products, not on things Americans buy at the mall or via Amazon.

The firms are anxious the tariffs will increase their costs since many of their products are manufactured in China.

Trump has strained relations with potential allies including the European Union, Canada and Mexico by raising tariffs on imported steel and aluminum. His promise to end what he says are grossly skewed Chinese trade relations was a key plank of his election.

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