United States targets $300B of Chinese goods for new tariff hikes

Daniel Fowler
May 14, 2019

China announced plans on Monday to implement tariffs on $60 billion worth of US goods imported to China starting June 1 in direct retaliation to the latest USA escalation.

China has vowed retaliation in response to US tariffs, and the president said he plans to send a portion of the funds raised by tariffs to American farmers who are bearing the brunt of the trade war. Cellphones and laptops would be included in that list but pharmaceuticals would be excluded, the office said.

The events have cast doubt on the conventional wisdom, dominant just 10 days ago, that the world's two biggest economies were edging toward a compromise on trade. Chinese yuan fell to its lowest in more than four months to 6.88RMB to the dollar. He added that he will be meeting with Chinese President Xi Jinping at the G20 Japan in late June. "I think it's working out well", he continued.

China's Global Times newspaper reported that Beijing was also considering cutting orders for new Boeing planes and boycotting USA agricultural products.

The trade war with China has taken its toll on Wall Street, with stocks tumbling on Monday.

"The increase in tariffs is likely to result in more policy easing from China, both monetary as well as fiscal", HSBC said. The tariff increases already in place have disrupted trade in such American products as soybeans and medical equipment and sent shockwaves through other Asian economies that supply Chinese factories. The paper said China wasn't to blame for the trade deficit and that US companies were largely profitable in China.

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"Many tariffed companies will be leaving China for Vietnam and other such countries in Asia".

The U.S. and China had been making progress toward a final trade deal but the tentative agreement all but fell apart last week after the Chinese sought to make revisions to the deal, the White House said. That brought the total of Chinese goods hit with the 25 percent tariff to $250 billion. The move affected 5,700 categories of Chinese products, including internet modems and routers. "China will never surrender to external pressure", foreign ministry spokesman Geng Shuang said at a regular briefing on Monday. Its state media kept up a steady drum beat of strongly worded commentary, reiterating that the door to talks was always open but vowing that China would defend its national interests and dignity. It was 95 percent there, and then my representatives as you know, Secretary Mnuchin and Bob Lighthizer, they went to China [and] were told the things fully agreed to we're not going to get anymore.

"So you absolutely can't put the hat on China of reversing positions and going back on one's promises", Geng said, adding China has shown goodwill in the talks and has kept its promises.

Tariffs on Chinese goods increased from 10% to 25% on Friday, making the underlying cost of those items higher for US customers. But Kudlow, head of the president's National Economic Council, acknowledged over the weekend that US consumers and businesses will bear some of the costs.

China's finance ministry said it plans to set import tariffs ranging from 5 percent to 25 percent on a target list worth about $60 billion. Even as his administration was busy slapping a hefty 25 per cent tax on $250 billion of Chinese imports last week, President Trump was tweeting about the strength of his relationship with China's President Xi and promising that "conversations into the future will continue".

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