China’s retaliatory tariffs on US$60 billion of US goods kick in, fanning fears of extended trade war
- Levies cover a total of 5,140 US products, including liquefied natural gas as well as petrochemical and food goods
- Beijing earlier announced it will blacklist ‘unreliable’ foreign entities and hinted at restricting supply of rare earth minerals to the US
China on Saturday raised tariffs to a maximum 25 per cent on US$60 billion worth of US products in retaliation for Washington’s latest tax increase on Chinese goods, fanning fears that the trade war between the world’s two biggest economies will not end soon.
US President Donald Trump has also tried to strike a better trade deal with Beijing by taking steps to stifle China’s technology sector, such as effectively banning American firms from supplying parts to Chinese telecommunication giant Huawei Technologies.
The Chinese leadership led by President Xi Jinping had indicated it would implement further retaliatory measures against Washington, depending on what Trump does. China has recently hinted at restricting its supply of rare earth minerals to the United States.
China’s Ministry of Commerce said on Friday that it will publish a list of “unreliable” foreign entities deemed to have damaged the interests of Chinese firms, with specific measures for those on the list to be revealed “in the near future”.
An escalation in economic and technology tensions between the world’s major powers has rattled financial markets across the globe, blurring the outlook for the world economy.
The tariffs, which came into effect on Saturday, cover a total of 5,140 US products including liquefied natural gas as well as petrochemical and food goods, whose tariff levels were lifted to up to 25 per cent from the current 10 per cent.
China, meanwhile, is the world’s dominant supplier of rare earths that are vital to the production of hi-tech goods like hybrid cars and mobile phones. The US is believed to receive around 80 per cent of its rare earth imports from China.
China to blacklist ‘unreliable’ foreign entities that ‘hurt Chinese firms’
The US and China held ministerial-level trade talks in Washington early last month, but they made little progress, leading the Trump administration to raise US tariffs on US$200 billion of Chinese products from 10 per cent to 25 per cent.
In addition to the increase, Trump has stepped up pressure on China by saying Washington has started work to impose a 25 per cent levy on the remaining US$325 billion of Chinese goods not yet subject to tariffs. The measure could be enforced as early as in late June.
Trump has urged China to take steps to rectify its massive trade surplus with the United States and to address what Washington regards as Beijing’s unfair trade practices such as alleged intellectual property and technology theft by Chinese firms.
The US president has accused China of reneging on commitments it had made during months of negotiations.
Does China have enough US dollars to survive the US trade war?
China’s economy has shown signs of slowing down with additional tariffs dampening exports to the United States, the world’s biggest market, and choking private spending and investment at home.
In April, the International Monetary Fund maintained its forecast for global economic growth in 2020 at 3.6 per cent but noted that “the possibility of further downward revisions is high”, citing risks including trade tensions and financial vulnerabilities.
