Tensions between US and China amidst their trade war are set to rise, after Donald Trump reportedly imposes tariffs on $200 billion in Chinese Goods, as reported by a joint article by South China Morning Post and Politico, on September 16th.
The tariffs could be imposed as soon as September 17th, according to an unnamed US official. According to him the tariffs would start at 10% but could reach as high as 25%, similar to other tariffs in the exchange.
A public comment period on Trump’s latest set of tariffs formally ended earlier this month, clearing the way for the president to make good on the threat.
The administration has threatened these set of tariffs for months as punishment for China’s policies that have resulted in intellectual property theft or mandated technology transfers on US companies doing business in China.
As reported by the South China Morning Post, in recent months, the administration has typically done an analysis of public comments before carrying through on announced tariffs, which right now are imposed on about $53 billion in Chinese imports. China has also retaliated with tariffs on approximately 53$ billion in US goods.
Many businesses had urged Trump to consider the effects of the tariffs on consumers, especially ahead of the retail holiday season.
“Continuing the tit-for-tat tariff escalation with China only serves to expand the harm to more US economic interests, including farmers, families, business, and workers,” the National Retail Federation and 150 other business groups said in a letter to US Trade Representative Robert Lighthizer in September, as cited by South China Morning Post.
The president has also threatened to impose tariffs on virtually all US$505 billion that the United States imports from China. “I hate to say that, but behind that, there’s another US$267 billion ready to go on short notice if I want,” Trump told reporters aboard Air Force One in September.
“We are under no pressure to make a deal with China, they are under pressure to make a deal with us. Our markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?” Trump posted on Twitter on September 13th, in response to a WSJ report claiming that the US is under pressure to make a deal with China.
Beijing has threatened to retaliate with tariffs ranging from 5 to 25% on an additional US$60 billion in US products as soon as the new tariffs are imposed.
According to the Global Times, in response to the threat of tariffs on $200 billion worth of Chinese goods, that China will not only play a defensive role in the trade war. Beijing may also decline to participate in proposed trade talks with Washington later this month if the Trump administration goes ahead with the additional tariffs, the WSJ reported on September 16th, citing unnamed Chinese officials.
On September 12th, the U.S. Treasury Department invited senior Chinese officials, including Vice Premier Liu He for more talks on the tariff dispute.
“It is nothing new for the U.S. to try to escalate tensions so as to exploit more gains at the negotiating table,” the Global Times, which is published by the ruling Communist Party’s People’s Daily wrote on September 17th. “We are looking forward to a more beautiful counter-attack and will keep increasing the pain felt by the U.S.,” the outlet further claimed.
Besides retaliating with tariffs, China could also restrict export of goods, raw materials and components core to U.S. manufacturing supply chains, former finance minister Lou Jiwei, who is Lou is chairman of the National Council for Social Security Fund, told a Beijing forum on September 16th, according to an attendee cited by Reuters.
CNBC cited experts at the Singapore Summit on September 16th, who claimed that escalating trade tensions between the United States and China would have manifested with or without Donald Trump. “I think we must not exaggerate the importance of Trump,” said Dani Rodrik, a professor at Harvard University, pointing to structural problems in the world economy.
Furthermore, CNBC cited Heenam Choi, CEO of the Korea Investment Corporation who claimed that economic problems in emerging markets and the ongoing trade war between the U.S. and China could increase the risk of the next financial crisis.