China escalates USA trade row with new tariffs

Daniel Fowler
August 23, 2019

Mr. Trump's tweets heighten trade tensions between the world's biggest economies, with China's latest countermeasures coming in retaliation for planned USA tariff hikes on roughly $300 billion in Chinese imports planned for next month and in December.

China also said it plans to resume its 25% duties on American automobiles and 5% tariffs on auto parts on December 15.

"We don't need China and, frankly, would be far...better off without them". Early Friday China said it would retaliate with taxes on $75 billion of US products along the same timeframe.

Trump also said he was "ordering" UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl.

US stocks fell to their lows of the day after Trump's remarks, with the S&P 500 Index down 1.7 per cent as of 12:15 NY.

The pending 10% tariff on another $300 billion in goods would hit everything from toys to clothing and shoes that China ships to the United States, however some 60% of the new tariffs wouldn't go into effect until mid-December, and others were taken off the table altogether.

The US government had announced on August 15 that it will impose additional tariffs of 10 per cent on Chinese goods worth about $300 billion effective on September 1 and December 15, respectively, in two batches.

China is also reinstituting an additional 25 per cent tariff on US-made vehicles and five per cent tariffs on auto parts that had been suspended at the beginning of the year.

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China responded Friday with new tariffs on $75 billion of US products in retaliation, deepening a conflict over trade and technology that threatens to tip a weakening global economy into recession. The Dow Jones Industrial Average dropped 100 points shortly after the markets opened, though investors appeared to be holding their breaths in anticipation of a speech by Federal Reserve Chairman Jerome Powell later in the morning. U.S. Treasury yields also fell as investors sought safe-haven assets.

President Trump said the delay was meant to ease the effect on US consumers during the holiday shopping season.

China gave no details of what goods would be affected in its latest round of tariffs, but the timing matches Trump's planned duty hikes.

Gao said trade teams from both sides have been keeping in touch, when asked whether the Chinese vice Premier Liu He would travel to Washington for the next round of face-to-face talks.

The United States, Europe, Japan and other trading partners say Beijing's development plans violate its market-opening commitments and are based on stealing or pressuring foreign companies to hand over technology.

Together, Ford, BMW, Mercedes and others export about 250,000 vehicles to China from the United States each year, according to the Center for Automotive Research, a think tank in Ann Arbor, Michigan. Carmakers such as Daimler and Tesla had adjusted their prices in China when the auto and auto parts tariffs had been suspended.

"It is essential for these two important economies to work together to advance balanced and fair trade", the company said.

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