President Donald Trump escalated his trade war with China on Monday, imposing 10 per cent tariffs on about US$200 billion (S$275 billion) worth of Chinese imports.
The $200 billion in US tariffs go into effect in less than a week, on September 24, leaving the two sides little time to sit down.
The new taxes will hit a broad swath of products, including billions in Chinese-made voice data receivers, computer memory modules, automatic data processors, and accessories for office equipment such as copiers and bank note dispensers – instantly making widely used goods more expensive.
Trump’s latest escalation of tariffs on China comes after several rounds of talks yielded no progress. More than 300 products were removed from that list – including smartwatches, health and safety devices and children’s playpens.
Trump continues to ratchet up pressure on Beijing to change its trade practices even as he floats the idea of talks. Trump’s decision threatens to upend the possibility of a diplomatic breakthrough with Chinese negotiators.
The US President also said he had great respect for Chinese President Xi Jinping, but the US goods trade deficit with China was too large and “we can’t do that any more”.
“Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices”, Mr Trump said.
And if the Trump administration enacts a further $267 billion round of tariffs, almost every Chinese import, the iPhone, along with all other smart phones, are likely to be included in the list.
In May, in fact, it looked briefly as if Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He had brokered a truce built around a Chinese offer to buy enough American farm products and liquefied natural gas to put a dent in the trade deficit.
China will further respond accordingly if the USA insists on increasing tariffs, according to the finance ministry.
Shortly after Mr. Trump’s tweets, China announced retaliatory tariffs.
“But this is an effort to work with China and say, it’s time that you address these unfair trading practices that we have identified, that others have identified, and which have harmed the entire global trading system”, the official asserted. “If countries will not make fair deals with us, they will be ‘Tariffed!'” “Make your products in the United States instead of China”.
The tariffs on the US$200 billion list will start on September 24, according to a senior USA administration official.
The latest clash deepens the conflict between the world’s top two economies that is already hurting companies on both sides of the Pacific. All of the items in Lam’s letter were included in the final list.
U.S. Chamber of Commerce President and CEO Thomas Donohue in a statement on Monday slammed the tariffs as anti-growth. Millions of iDevices are exported from manufacturers in China each year, and Chinese government officials have explicitly suggested that those products could be casualties in the trade war. As counterintuitive as it might seem, the president sees this fact as ultimately helping USA workers.
Still, he added that “the uncertainty around the issue and the potential for additional tariffs is affecting the market, and we’re beginning to see some of the economic activity in China starting to moderate as a result of that”. He said companies will be forced to choose between raising prices on goods or absorbing the hit to their profit margins.
But how far China is willing to go to change is uncertain.
The report quoted one senior Chinese official saying the country would not negotiate “with a gun pointed to its head”.
China, he said, has had many opportunities to fully address USA concerns.