China’s running out of US goods to tax, so what other ways can it hit back in the trade war?
Debate starts to focus on alternative ways to hurt America, ranging from targeting specific imports with higher tariffs to making the exports the US wants the most more expensive
Fresh ideas about how to fight the trade war with the US have begun to fly in China after Beijing was unable to respond in full to the latest escalation in the dispute because it is rapidly running out of room to use tariffs as a weapon.
US President Donald Trump announced on Monday that he would impose 10 per cent tariffs on US$200 billion worth of Chinese imports on September 24, with the tariff rate rising to 25 per cent on January 1 if Beijing does not make concessions.
Combined with the previous US$50 billion tariffs on Chinese imports, about half of all Chinese exports will be effected by the measures. Trump has further threatened to target to all Chinese imports unless China agrees to settle the dispute.
The Chinese response to Trump’s latest move was on a far smaller scale – tariffs of between 5 per cent and 10 per cent on US$60 billion of American goods and it is now running out of leeway to target US imports further.
When the latest levy goes into force on Monday, US$110 billion of the total US$150 billion in American imports to China will be affected.
Tariffs on the remaining US$40 billion – including key manufacturing components such as semiconductors – would hamstring Chinese manufacturers.
It is becoming increasingly clear to Chinese officials that the chances of a swift end to the trade war are diminishing rapidly, forcing them to explore new ways to respond.