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US Slaps New Tariffs On China; One Minute Later China Retaliates


Originally appeared at ZeroHedge

The biggest reason for last week’s torrid stock market rally was rekindled “optimism” that the escalating trade war between the US and China may be on the verge of another ceasefire following phone conversations, fake as they may have been, between the US and Chinese side. This translated into speculation that a new round of tariffs increases slated for this weekend may not take place or be delayed.

However, that did not happen, and with no trade deal in sight, at 12:00am on Sunday, the Trump administration slapped tariffs on $112 billion in Chinese imports, the latest escalation in a trade war that’s ground the global economy to a halt, sent Germany into a recession, and given the market an alibi to keep rising because, wait for it, “a trade deal is imminent.”

Only, it isn’t, and 1 minute later, at 12:01am EDT, China retaliated with higher tariffs being rolled out in stages on a total of about $75 billion of U.S. goods. The target list strikes at the heart of Trump’s political support – factories and farms across the Midwest and South at a time when the U.S. economy is showing signs of slowing down.

The 15% U.S. duty hit consumer goods ranging from footwear and apparel to home textiles and certain technology products like the Apple Watch. A separate batch of about $160 billion in Chinese goods – including laptops and cellphones – will be hit with 15% tariffs on Dec. 15. China, meanwhile, began applying tariffs of 5 to 10% on U.S. goods ranging from frozen sweet corn and pork liver to bicycle tires on Sunday.

The slated 15% U.S. tariffs on approximately $112 billion in Chinese goods may affect consumer prices for products ranging from shoes to sporting goods, the AP noted, and may mark a turning point in how the ongoing trade war directly affects consumers. Nearly 90% of clothing and textiles the U.S. buys from China will also be subjected to tariffs.

US Slaps New Tariffs On China; One Minute Later China Retaliates

Until today, the Trump administration has avoided tariffs on consumer goods – even as the president claimed that only China was paying for tariffs – and consumer spending has remained high amid slowdowns in other economic areas such as investment spending and exports. President Trump’s economic advisors, Larry Kudlow and Peter Navarro, have consistently argued the trade conflict will not or will minimally affect consumers, although the stated reason for the delay in another $160bn in tariffs on consumer goods until Dec. 15 is precisely due to the administration’s fear of a price shock ahead of the holidays.

Beijing has vowed retaliatory tariffs that, combined with the Sunday increases, would cover $75 billion in American products once the Dec. 15 tariffs take effect.

As expected, Chinese state media on Sunday knocked the U.S. for the continuing tariffs, arguing they would hurt American interests as well, according to Reuters.

“The United States should learn how to behave like a responsible global power and stop acting as a ‘school bully,’” the official Xinhua news agency said, Reuters noted.

China has repeatedly slammed US pressure tactics, with signs that its officials are girding for a prolonged confrontation.

“China’s determination to fight against the U.S. economic warmongering has only grown stronger, and its countermeasures more resolute, measured and targeted,” according to a commentary by the official Xinhua News Agency after the tariffs kicked in. One thing that “White House tariff men should learn is that the Chinese economy is strong and resilient enough to resist the pressure brought about in the ongoing trade war.”

And speaking of economic impact, the Congressional Budget Office has projected that by 2020, Trump’s tariffs and trade war will reduce the level of real U.S. GDP by about 0.3% and reduce average real household income by $580. Separately, JPMorgan has estimated that the latest round of tariffs will increase the average cost per U.S. household to $1,000 a year – up from $600 for duties enacted last year. That estimate is in the low range because it was based on a duty rate of 10%, before Trump increased it to 15%.

US Slaps New Tariffs On China; One Minute Later China Retaliates

As Bloomberg reports, about 90% of California-based JLab Audio’s headphones and other wireless products targeted for duties got hit Sunday, possibly hurting holiday sales and forcing a delay in hiring, CEO Win Cramer said. About 40% of the company’s sales come in the fourth quarter, he said.

“If I had hair, I’d be pulling it out,” Cramer said. “I’m really concerned about the financial performance of the business, knowing that if we continue to eat this cost, how much it hurts.”

Well, Cramer, just pass the costs along to the consumer. Supposedly the economy is super strong, and higher inflation is precisely what the Fed wants, so win-win-win, right?

Others were just as vocal in their criticism of Trump’s trade war: Gary Shapiro, president of the Consumer Technology Association, said the Trump administration’s approach of using tariffs to pressure China into a deal has backfired.

“U.S. companies have to spend more resources on constantly changing trade rules and less on innovation, new products and our economic health,” Shapiro said. “This is not how you reach a meaningful trade agreement.”

Among the higher Chinese duties that took effect Sept. 1 include an extra 10% on American pork, beef, and chicken, and various other agricultural goods, while soybeans will get hit with an extra 5% tariff on top of the existing 25%. Starting in mid-December, American wheat, sorghum, and cotton will also get a further 10% tariff. While China imposed a new 5% levy on U.S. crude oil starting from September, there was no new tariff on liquefied natural gas.

The resumption of a suspended extra 25% duty on U.S. cars will resume Dec. 15, with another 10% on top for some vehicles. With existing general duties on autos taken into account, the total tariff charged on U.S.-made cars would be as high as 50%.

* * *

While the Trump administration has dismissed concern about a protracted trade war, business groups are calling for a tariff truce and the resumption of negotiations between the world’s two-largest economies. On Friday, Trump told reporters that face-to-face talks between Chinese and American trade negotiators scheduled for Washington in September are still happening “as of now,” before going to Camp David, the U.S. presidential retreat.

“We’re going to win the fight,” he said.



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  • dutchnational

    One must be realistic. China imports from the US very much less then it exports, while there are many obstacles to US exporters, incl forced technology transfer and unfair pricing by the chinese. This deficit is unsustainable. So something had to give. As China did not budge, a clash was unavoidable.

    Nobody will win here, except for maybe Vietnam and some others that take over some chines exports.US citizens will pay most of the import duties, but maybe the US will use a quota system instead of import duties. The US must rebuild part of its industrial base, preferably in coordination with Mexico and Canada.

    In the end, the only solution will be a limited trade inbalance, not a very large trade inbalance.

    • Ray ” Uncle Sam”

      The people in the usa are the biggest loosers because they have to pay in the end!

      • dutchnational

        The people could choose to not buy chinese stuff but instead goods from SE Asia and Mexico. They can do without most of the stuff. US has overconsumption anyway, so some reduction would be ok.

        Still, as I said US people will pay most of the collected duties, somewhat mitigated by lower exchange rates.

        • Ray ” Uncle Sam”

          All electronics are made in china good look! Waiting for an Iphone not made in china!!!!!!!!

          • dutchnational

            Many factories in Malaysia, Singspore. US companies are already shifting some industrial capacity towards those country, Thailand and Vietnam.

          • Barba_Papa

            So that basically means Americans still won’t get those jobs, nor will the American trade deficit improve, it will just change from cheap imported Chinese goods to cheap imported Vietnamese and other SEA countries goods. Nor could Americans afford to buy domestically produced goods, nor could Europeans, because our wages have stagnated for the last decades. We need those cheap imports, otherwise we couldn’t afford squat anymore.

          • Ray ” Uncle Sam”

            and tomorrow trump puts tarifs on them too

      • Morehungrythanever

        Pay for some things. However China now pays for re-building infrastructure. Don’t be so blind.

    • Gary Sellars

      “forced technology transfer and unfair pricing by the chinese”

      What a fucking LIAR. There is no forced tech transfer, just US companies agreeing to share IP with joint venture partners in exchange for free factories, free land, free electricity/water/gas, zero taxes and a vast pool of compliant labour to power their enterprises. US companies has made a MOUNTAIN of money, essentially converting their IP into cash before it becomes obsolete due to tech advancement.

      Unfair pricing? Unfair because Chinese have greatly reduced their costs of production thru investment and leveraging their cheap labour? Boo hoo… US can’t compete so they cry wolf…

      • Icarus Tanović

        100% true. Remember that woman that is somwthing like Huawei CEO, that was apprehended in Canada, by the orders given from USA, just like they do not have their own government. Maybe they don’t.

        • grumpy_carpenter

          She is being held on an extridition request by the USA. It’s got nothing to do with politics, the request triggers a legal process that must be followed under Canadian law.

          • Icarus Tanović

            Under false accusations. They do not have to follow american requests, America bully countries, just like they bullied Gibraltar.

      • dutchnational

        Forced technology transfer is in place. No investment in fully owned US factories, access to the technology for chinese partners. Europe has the same objections to this trade practice. Combined with documented copying and industrial spying, no respect for patents, china has build an illegal competition. By controlling the value of its currency, China is forcing lower prices, a forbidden-wto-practice. This is widely documented and reported. Calling me a liar for saying what is happening is making you a liar. Let us not be naive. US has a valid complaint against China.

        About the way it handles this, one can have doubts. That is has to do something is plain for everybody to see.

        • Ronald

          US corporations have moved production to China from the US
          Those corporations MUST of necessity teach the Chinese workers how to make their product, or it will not be made to spec.
          So the “forced transfer” is from US corporations, not the Chinese government.

        • grumpy_carpenter

          China isn’t a liberal democracy. They are a communist country with a strong manufacturing / mercentile sector. Nowhere is it written that communists can’t partake in business and trade and make money. In fact that’s the economic objective of any communist country …. make life better for their people by making them richer.

          What you can’t expect them to do is respect patent rights or shareholders rights for reasons obvious to anyone who understands the difference between communism and capitalism.

          US companies went into China knowing full well they were dealing with a communist country. There was enough profit in screwing US factory workers and unions that they accepted the communists terms to do business in China. Now that China is beating them at their own game they want to change the terms of their agreements.

    • grumpy_carpenter

      China exports more goods to China however what is never mentioned in the MSM is that this is offset by US services sold to China and that US retailers raked in hundreds of Billions in China last year while Chinese retailers don’t even exist in the USA. The USA makes it look like there is a trade imbalance by focusing on manufactured goods alone while ignoring services and retail but in reality there is a trade imbalance in the USA’s favour if both goods and services are counted.

  • Real Anti-Racist Action

    As an American I am very happy with this. This is good news for both China and USA.
    USA became poor but not employing us to build our own things. Now I have been seeing more factories poping up and hiring.
    China needs to make their own things for their own citizens.
    USA needs to make their own things for their own citizens.
    We have cause global warming by growing things like cotton in the US, then shipping that cotton the China to make into clothes just to ship back to the US.
    We have destroyed the earth with this zionist-trade-policy.
    Now we can save the earth by growing local. Making local. And buying local.

  • The sticking points are not the terms of trade, which were agreed last year. The negotiations have come aground on the principles China wants enshrined in the agreement:

    1. Lift all punitive, non-WTO tariffs, embargoes, and bans before the agreement is signed.

    2. All conditions in the agreement must apply equally to both parties.

    3. Xi’s original 2018 offer may be embellished but not substantively changed.

    4. China has twenty years to implement the terms of the agreement.

    • Gary Sellars

      Chinese are being reasonable but rapacious US doesn’t care about anything except what it wants, regardless of “rules” or “justice” or the effect their demands have upon others. Playground bully meets gunship diplomacy.

      • Real Anti-Racist Action

        Why do we need to destroy the earth with pollution and global warming from shipping everything across an already polluted ocean?
        China can make their own stuff, USA can make their own stuff.
        Now that is a fair agreement.

        • Harry Smith

          USA can not make a lot of stuff. Nowdays, there are no enough PROs in the USA to work on new factories. The generation of skilled workers had retired and did not transferred their knowledge to the new generation of workers, because the factories were closed due to the moving production in China. So, right now, you have a huge gap in the labor force. USA has a lot of unemployed people with useless college diplomas like economists or lawyers, but not enough seamstresses.

        • Concrete Mike

          Thats what globalization iS, remember in the 90’s that was all that was talkied about.

          Now we see it was just a trick to massively increase shareholder profits to the detriment of workers.

  • Boycott-Israel!

    “American pork, beef, and chicken, and various other agricultural goods, while soybeans” Geez, China is basically importing garbage from US, stop it already.

  • nick1111

    Goddamn idiot in the WH

  • Rodger

    The US and China lose, everybody else wins. Nice!

  • Xoli Xoli

    Made in China fokong goods have no quality.It only stuff African shelves more especiallySouth Afria,Namibia, Zimbabweand Zambia.We call them break after sell and delivery.Sometimes we call them one day last.

    I dislike France,Britain and USA because of war but will never allow to be rule by China with that Samurai Buddha oppressive laws.

  • Ralph Conner

    Business is war and Morons don’t do well at either. The US will have to bail itself out just as we bailed out all Thump’s other business failures.