Trump threatens 'economic retaliation' if China goes after USA workers

Daniel Fowler
September 19, 2018

That followed the Trump administration's announcement late Monday that it would impose a 10% tariff (with a lowercase T, in the standard noun form) on $200 billion of Chinese goods, which was followed by Beijing placing tariffs on an additional $60 billion of US goods.

Multiple reports in recent days cited officials saying Trump had made a decision to press ahead with new tariffs, but at a lower rate of 10 percent after initially announcing they should be hiked to 25 percent in light of China's alleged intransigence.

"Tariffs have put the USA in a very strong bargaining position, with billions of dollars, and jobs, flowing into our country - and yet cost increases have thus far been nearly unnoticeable", Mr Trump said on Twitter. But if the administration enacts the additional tariffs it would engulf all remaining United States imports from China and Apple products like the iPhone and its competitors would not likely be spared.

Trump took to Twitter on Tuesday morning to say that any further action by China targeting United States farmers and industrial workers would result in "great and fast economic retaliation" from the US.

The iPhone was not among the "wide range" of products that Apple told regulators would be hit by the $200 billion round of tariffs in a September 5 comment letter to trade officials.

Items previously designated to be hit by 20 or 25 per cent tariffs included products ranging from liquefied natural gas and mineral ores to coffee and various types of edible oil.

The tariffs are the latest in the tit-for-tat trade war brewing between China and the USA for months. It was unclear if the tariffs announced on Tuesday were lower to match the United States plan.

The original justification for the USA tariffs was supposed to be Chinese violations of United States intellectual property, explained Derek Scissors, an expert on China's economy and U.S. economic relations with Asia and a resident scholar at the American Enterprise Institute. That would raise the total affected by US penalties to $517 billion, covering almost everything China sells to the United States. Beijing is still ready to negotiate an end to the trade tensions, it said.

"China is forced to respond to U.S. unilateralism and trade protectionism, and has no choice but to respond with its own tariffs", the finance ministry said in a statement on Tuesday. What is more, it is conceivable that China will also slap a punitive tariff on U.S. crude oil.

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Trump said China had refused to change the unfair practices that hurt USA businesses and workers. He said if the new tariffs were implemented, those will impact consumers and also diminish the U.S.'s "leadership on the emerging technologies that will shape our future". The tariffs would increase to 25 percent on January 1, 2019.

But that doesn't mean China won't respond to the Trump administration's tariffs.

"China has had many opportunities to fully address our concerns", Trump said.

Dutch bank ING estimated that 2.5 percent of world trade was now affected by the tariffs and it will be 4 percent if Trump carries out threats to put levies on all Chinese imports. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to discussions.

U.S. Chamber of Commerce President and CEO Thomas Donohue in a statement on Monday slammed the tariffs as anti-growth.

It's the latest move in Trump's push against "unfair" trade policies, which economists fear will prove counterproductive.

However, senior administration officials told reporters the initial list announced in July was reduced by 300 product lines in response to 6,000 written comments from consumers and businesses.

Overall prices for furniture are likely to increase 2% to 4%, according to a NRF report, as manufactures eat part of the new tax and pass part on to consumers.

"In the short term, we will have higher prices and fewer jobs than we would have had otherwise", Sohn said.

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