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US-China trade war
EconomyGlobal Economy

China braces as new US global tariffs loom: fresh trade war or managed friction?

With US expected to pivot to more durable tariffs under Section 301, analysts expect bilateral guard rails to keep tensions from spiralling

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An American flag flies near a container ship at the Port of Los Angeles in California on May 28. Photo: Getty Images via AFP
Mia Nurmamat

China could soon face a tariff framework that gives the United States greater room to escalate trade measures and impose more targeted levies as Washington’s temporary duties near expiry, though analysts said the immediate effect of the proposed rates is likely to be limited.

The US imposed 10 per cent global tariffs earlier this year under Section 122 of the Trade Act after the Supreme Court struck down US President Donald Trump’s “Liberation Day” duties. Those duties are set to expire on Friday, potentially paving the way for a new phase of tariffs targeting about 60 trading partners.

US Trade Representative Jamieson Greer said the next round of tariff enforcement could cover economies accounting for about 99 per cent of US imports. Speaking on CNBC’s Squawk Box on Tuesday, he noted that “we expect to see some action soon” but declined to provide an implementation timeline.

In early June, the US Trade Representative’s Office proposed duties of up to 12.5 per cent on imports from 60 economies under Section 301 of the Trade Act – a statute used to target unfair trade practices – citing alleged failures to address forced labour concerns in supply chains.

“The shift to a more flexible Section 301 legal basis gives the administration greater scope for targeted, expandable actions compared to broad emergency tariffs,” said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis.

“Consistent with President Trump’s reciprocal trade approach and past record, including the phase one negotiations, we should anticipate further measures – potentially higher rates or sector-specific duties – if trade imbalances, IP issues or national security concerns persist,” she said.

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