The Missing China Trade Strategy

Lester Mason
September 19, 2018

The United States has announced fresh tariffs on $200 billion (€171 billion) of Chinese goods, spooking markets anxious about an escalating tit-for-tat trade war between the world's largest economies.

The US administration said it is giving US businesses a chance to adjust and look for alternative supply chains by delaying an increase to 25 percent on January 1 for the US$200 billion batch of Chinese goods, said two senior US administration officials who briefed reporters on Monday.

President Donald Trump on Tuesday threatened further retaliation against China if Beijing targets U.S. agricultural or industrial workers amid a trade dispute, and accused China of trying to sway the United States election by targeting farmers. But they object to Trump's tactics and warn the dispute could chill global economic growth and undermine worldwide trade regulation.

European share markets followed Asian counterparts lower on Monday as investors took fright at news Washington was set to announce a new round of tariffs on Chinese goods.

Fang told the Tianjin forum that he hopes the two sides can sit down and talk, but added that the latest U.S. move has "poisoned" the atmosphere. The group questioned whether or not the tariffs are actually legal-it said "Congress has not given the president or the USTR a blank check to pursue a trade war"-and expressed its hope that the Trump administration will rethink the tariffs".

People who claimed that imposing trade tariffs on China would not hurt the US economy were "fooling themselves", Susan Schwab, who served as the US Trade Representative in the administration of former US President George W. Bush, told an event hosted by the Centre for Strategic and International Studies on Monday.

Collection of tariffs on the long-anticipated list will start on September 24, but the rate will increase to 25 per cent by the end of this year.

If the administration pursues what it calls "phase three" of the tariff strategy, it would raise the total value of affected Chinese goods to $517 billion - covering almost everything China sells the United States.

The latest escalation of the US-China trade clash had all but dismantled the platform for the proposed negotiations before they could even begin.

"For months, we have urged China to change these unfair practices and give fair and reciprocal treatment to American companies", Trump said in a statement. The tariffs will apply to 5,207 items.

"But, so far, China has been unwilling to change its practices", including theft and forced transfer of technology. This has raised concerns that China could retaliate with non-tariff trade measures. The administration is targeting a variety of products - from sockeye salmon to bamboo mats - forcing USA companies to scramble for suppliers outside China, absorb the import taxes or pass along the burden to their customers. Mr Trump said in another tweet yesterday.

U.S. President Donald Trump on Tuesday said China had been taking advantage of the U.S. on trade for many years and that he knew how to stop it.

The missive from Cupertino complained that some Apple products were included on a list of $200 billion worth of Chinese imports that could face tariffs imposed by the United States Department of Homeland Security.

But a senior Trump administration official said Monday that, while it seeks changes in China's trade policies, the "not trying to constrain China's growth".

Wall Street bounced back on Tuesday, led by gains in consumer discretionary, technology and industrial stocks as investors shrugged off escalating trade rhetoric between the United States and China.

USA officials told reporters the lower initial tariff rate would give businesses time to find new suppliers. "China's got lots of leverage ... to work around a 10 percent tariff".

The president has vowed to put punitive tariffs on another $200 billion in Chinese goods, meaning tariffs would now affect roughly half of what the United States buys from China - its largest source of imported merchandise.

But the adjustments did little to appease technology and retail groups who argued USA consumers would feel the pain. US Treasury Secretary Steven Mnuchin last week invited top Chinese officials to fresh discussions, but thus far nothing has been scheduled.

Other reports by Iphone Fresh

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