Trump hits China with fresh tariffs, threatens more if Beijing retaliates
U.S. President Donald Trump escalated his trade war with Beijing, imposing 10 percent tariffs on about $200 billion worth of imports in a move one senior Chinese regulator said “poisoned” the atmosphere for negotiations.
Trump also warned in a statement on Monday that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
China is reviewing plans to send a delegation to Washington for fresh talks in light of the U.S. decision, the South China Morning Post reported on Tuesday, citing a government source in Beijing, raising the risk of a prolonged trade battle between the world’s largest economies that could hit global growth.
U.S. trade actions against China will not work as China has ample fiscal and monetary policy tools to cope with the impact, a senior securities market official said.
“President Trump is a hard-hitting businessman, and he tries to put pressure on China so he can get concessions from our negotiations. I think that kind of tactic is not going to work with China,” Fang Xinghai, vice chairman of China’s securities regulator, said at a conference in the port city of Tianjin.
Collection of tariffs on the long-anticipated list will start on Sept. 24 but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure Beijing to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. China has retaliated in kind.
Vice Premier Liu He was set to convene a meeting in Beijing on Tuesday morning to discuss the government’s response, Bloomberg News reported, citing a person briefed on the matter.
China has vowed to retaliate against new U.S. tariffs, with state-run media arguing for an aggressive “counterattack.”
Last month, it unveiled a proposed list of tariffs on $60 billion of U.S. goods ranging from liquefied natural gas to certain types of aircraft – should Washington activate the tariffs on its $200 billion list.
The effect of the 10 percent tariffs will gradually show up in China’s fourth-quarter data, and the full impact of the total 25 percent tariffs is expected to be felt next year, dragging down China’s gross domestic product (GDP) growth rate by 0.83 percentage point, Citi analysts wrote in a note.
Fang said that even if Trump puts tariffs on all Chinese exports to the United States, the negative impact on China’s economy will be about 0.7 percent. He did not say whether he was referring to the impact on the amount of GDP or the GDP growth.