Donald Trump may up stakes in US-China trade war by raising tariffs on US$200 billion worth of goods

US President considers plan to raise tariffs on wide range of imports from 10 per cent to 25 per cent

PUBLISHED : Wednesday, 01 August, 2018, 11:16am
UPDATED : Wednesday, 01 August, 2018, 4:23pm

The Trump administration plans to propose slapping a 25 per cent tariff on US$200 billion of imported Chinese goods after initially setting them at 10 per cent, in a bid to pressure Beijing into making trade concessions, a source familiar with the plan said on Tuesday.

President Donald Trump’s administration said on July 10 it would seek to impose the 10 per cent tariffs on thousands of Chinese imports.

They include food products, chemicals, steel and aluminium and consumer goods ranging from dog food, furniture and carpets to car tyres, bicycles, baseball gloves and beauty products.

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While the tariffs would not be imposed until after a period of public comment, raising the proposed level to 25 per cent could escalate the trade dispute between the world’s two biggest economies.

The source said the Trump administration could announce the tougher proposal as early as Wednesday. The plan to more than double the tariff rate was first reported by Bloomberg News.

There was no immediate reaction from the Chinese government.

In July it accused the United States of bullying and warned it would hit back.

Investors fear an escalating trade war between Washington and Beijing could hit global growth, and prominent US business groups have condemned Trump’s aggressive tariffs.

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A spokeswoman for the US Trade Representative’s Office declined to comment on the proposed tariff rate increase or on whether changing them would alter the deadlines laid out for comment period before implementation.

In early July, the US government imposed 25 per cent tariffs on an initial US$34 billion of Chinese imports. Beijing retaliated with matching tariffs on the same amount of US exports to China.

Washington is preparing to also impose tariffs on an extra US$16 billion of goods in coming weeks, and Trump has warned he may ultimately put them on over half a billion dollars of goods – roughly the total amount of US imports from China last year.

The US$200 billion list of goods targeted for tariffs – which also include Chinese tilapia fish, printed circuit boards and lighting products – would have a bigger impact on consumers than previous rounds of tariffs.

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Erin Ennis, senior vice-president of the US China Business Council, said a 10 per cent tariff on these products is already problematic, but more than doubling that to 25 per cent would be much worse.

“Given the scope of the products covered, about half of all imports from China are facing tariffs, including consumer goods,” Ennis said. “The cost increases will be passed on to customers, so it will affect most Americans pocketbooks.”

Trump had said he would implement the US$200 billion round as punishment for China’s retaliation against the initial tariffs aimed at forcing changes in China’s joint venture, technology transfer and other trade-related policies.

He also has threatened a further round of tariffs on US$300 billion of Chinese goods. The combined total of over US$500 billion of goods would cover virtually all Chinese imports into the United States.

The US Trade Representative’s office initially had set a deadline for final public comments on the 10 per cent proposed tariffs to be filed by August 30, with public hearings scheduled for August 20-23.

It typically has taken several weeks after the close of public comments for the tariffs to be activated.