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China-US relations

Donald Trump’s threat to slap heavy tariffs on China ‘could devastate US economy’

American Chamber of Commerce warns that US president’s plan could prompt destructive trade war that would have serious impact on businesses and families 

PUBLISHED : Friday, 16 March, 2018, 12:01pm
UPDATED : Friday, 23 March, 2018, 12:05pm

US President Donald Trump’s plan to impose heavy tariffs on China will have a “devastating impact” on the US economy, the US Chamber of Commerce has warned. 

The comments by the world’s largest business federation on Friday came in the wake of the White House’s threat to impose tariffs of US$30 billion or more on Chinese goods unless Beijing scraps a law forcing foreign businesses to transfer proprietary technology to their Chinese partners.

“The administration is right to focus on the negative economic impact of China’s industrial policies and unfair trade practices, but the US chamber would strongly disagree with a decision to impose sweeping tariffs,” chamber president Thomas Donohue said in a statement.

“As we’re starting to see, tariffs could lead to a destructive trade war with serious consequences for US economic growth and job creation. 

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“The livelihood of America’s consumers, businesses, farmers, and ranchers are at risk if the administration proceeds with this plan.”

Donohue said tariffs were “damaging taxes on American consumers” that would wipe out any gains American families received from tax cuts.

“We urge the administration to not impose these tariffs and to work with the business community to resolve the real and justifiable concerns raised by Chinese trade practices,” he said.

Tensions over trade have escalated between the two sides since late last year. 

In January Beijing announced that last year it had recorded a record trade surplus with the United States of US$275.8 billion – an 8.6 per cent rise from 2016. The total is about 65 per cent of China’s total global trade surplus.

Washington wants China to cut its trade surplus with the US by US$100 billion. 

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Last month Beijing’s top diplomat Yang Jiechi and its most senior economic adviser Liu He both visited Washington, but they failed to stop Trump from taking further action against China.

A February 16 report by the US Department of Commerce suggested imposing a 23.6 per cent tariff on aluminium products from Hong Kong and mainland China plus three other countries. 

The department also called for a 53 per cent tariff on steel products from China and 11 other countries, saying the import of foreign metals threatens the viability of US manufacturers.

This week Hong Kong urged America’s top diplomat in the city to exclude it from the tariffs.

On Thursday, Commerce and Economic Development Secretary Edward Yau Tang-wah met US consul general Kurt Tong to convey Hong Kong’s concerns and formally request that it be excluded from the aluminium tariffs.

“We urge the US administration to exclude Hong Kong from its plan … We consider such measures unilateral, discriminatory and based on unfounded allegations. We also urge the US administration to engage in full dialogue with us prior to any unilateral action,” Yau said in a statement on Thursday.

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Yau said Washington enjoyed a US$32.5 billion trade surplus with Hong Kong, the biggest of any country or territory. 

Hong Kong’s exports of aluminium products were worth about US$30 million in the first 10 months of last year, accounting for less than 0.2 per cent of the total import of such products in the United States.

Yau said this would have little impact on US workers and industries.

“These minimal exports would by no means threaten the US’ national security or the viability of the US domestic industries,” he said. 

“The proposed tariff is totally unjustified. We urge the US administration to give full regard to the long-standing and close bilateral trade relations with Hong Kong, a reliable and responsible trading partner of the US.”

The US Department of Commerce claimed that between January and October 2017 there was a US$55 million trade deficit between the US and Hong Kong concerning aluminium.  

Kristin Haworth, a spokeswoman for the US consulate, said: “We had a good exchange of views yesterday with Secretary Yau, and we have relayed his concerns to Washington. 

“We value our economic relationship with Hong Kong, and expect that it will continue to bring great benefit to the peoples of both the United States and Hong Kong.”