USA imposes new $200bn tariffs on China

Peter Morici, professor at the University of Maryland, discusses how the Trump administration imposed tariffs on $200 billion worth of Chinese goods and why raising the unemployment rate in China would put pressure on Beijing.

China said on Tuesday that it has no choice but to retaliate against new U.S. trade tariffs, raising the risk that President Donald Trump could soon impose duties on virtually all of the Chinese goods that America buys.

But the final list of taxed devices described by the official avoids many big consumer brand names and products.

But aside from adjusting the list of products affected by the tariffs, such as removing smart watches from the latest round, the administration has remained largely impervious to the efforts of lobbyists.

China’s Ministry of Commerce said it would hit $60 billion worth of American imports with tariffs of between 5 and 10 percent on September 24.

On Wall Street, all three major indices were solidly in the red toward 1930 GMT and word of the fresh round of tariffs had already sent Chinese stocks tumbling more than one percent, with the benchmark Shanghai Composite Index falling to 2,651.79, the lowest level since 2014.

A weaker USA dollar has boosted gold prices while the price of most base metals slipped on the back of concerns that demand for metals will weaken as a result of the trade dispute.

The new 10% tariffs are in addition to $50 billion worth of Chinese goods facing tariffs imposed earlier this year.

Geng said he would not comment on “hypotheticals” such as what measures Beijing might consider apart from tariffs on United States products, saying only that details would be released at the appropriate time. While consumer electronic products were generally removed, network and router items will be covered by the tariffs, senior administration officials said on a call with reporters Monday.

Its own long-term economic and strategic ambitions and its domestic political stability make it hard for China’s President Xi Jinping to be seen to be intimidated into conceding to the United States actions and threats.

Those included high-profile consumer products, such as smart watches, bicycle helmets, play pens and baby auto seats.

The US Treasury did not respond to a request for comment on Tuesday morning. Apple Chief Executive Tim Cook had dinner with US President Donald Trump last month, though neither gave details of discussions.

China’s finance ministry said it will respond accordingly if the U.S. further increases tariffs.

The chamber appealed to both governments for “results-oriented negotiations”.

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. “Make your products in the United States instead of China. Billions of dollars is being spent on new plants all around the country!”

An array of equipment used to make servers and networking gear for data centers is on the list announced on Monday.

The changes come after fierce opposition from companies, including global tech giants such as Apple, Dell and Hewlett Packard Enterprise. “Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection”.

Apple also told regulators earlier that some of the gear in its data centers was likely to be hit by tariffs.

The exemption comes at a critical time for Apple, days after it unveiled its latest smartwatch and 3 new iPhones – which will hit stores starting Friday – in a bid to push up its growth after it slipped to third place among smartphone makers.

The administration is targeting a bewildering variety of products – from sockeye salmon to baseball gloves to bamboo mats – forcing US companies to scramble for suppliers outside China, absorb the import taxes or pass along the cost to their customers.

Bob Woodward’s book Fear: Trump in the White House, provided a scary insight into Trump’s understanding of trade issues.