China targets American diamonds, alcohol and LNG with latest tariff threat

Consumers of high-end products could feel the pinch if Beijing’s new duties on US imports come into play

PUBLISHED : Tuesday, 07 August, 2018, 10:02pm
UPDATED : Tuesday, 07 August, 2018, 10:02pm

After China threatened to impose new tariffs of between 5 and 25 per cent on US$60 billion worth of goods it imports from the United States, we take a look at some of the items that might be affected:

Liquefied natural gas

Beijing’s threat to slap a 25 per cent tariff on imports of liquefied natural gas (LNG) from the US is most likely a response to President Donald Trump’s repeated pledge to make the US a dominant player in the global energy market.

During his visit to China last year, Trump said that buying more LNG would be a way for Beijing to reduce its trade surplus with the US, which led to state-owned China Petrochemical Corp, also known as Sinopec, signing a US$43 billion deal for an LNG project in Alaska.

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Partly driven by its efforts to reduce pollution caused by coal burning, China last year became the world’s second-largest importer of LNG, according to figures from S&P Global Platts Analytics. In the first seven months of 2018 it imported more than 1.88 million tonnes, up from 1.61 million tonnes in the whole of last year.


Alcoholic drinks from America will become more expensive if the new duties come into play, with a 25 per cent tariff slated for beer, wine, brandy, gin, liqueurs and tequila, and a 20 per cent levy on rum and vodka. Some cordials will also be hit by the 25 per cent duty.

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With its growing middle class, China is now one of the world’s leading markets for alcohol. Of the US$1.53 billion worth of wine exported by the US in 2017, about 5 per cent, or US$79 million, went to China, according to California-based Wine Institute. Meanwhile, sales of American liquors to China have also grown exponentially, from US$959,000 in 2001 to US$12.8 million in 2017, according to the Distilled Spirits Council of the United States.

Diamonds, pearls, fashion accessories and clothes

In a swipe at the luxury end of the market, Beijing threatened to impose 25 per cent tariffs on a host of high-end goods, including watches and jewellery, and the gem stones used to make them, such as diamonds, rubies, crystals and pearls. The same duty would also be added to selected items of apparel and accessories, including dresses, knitwear, leather bags and purses. Gold accessories would be slightly less affected, with Beijing proposing a 20 per cent tariff.

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China is the world’s largest producer and consumer of gold, with its jewellery market accounting for 30 per cent of global demand for the precious metal, according to the World Gold Council.

The proposed tariffs would be damaging for America’s luxury brands that have seen their sales in the world’s most populous country soar in tandem with rising living standards and booming wealth.

Tablet computers

Beijing’s plan to impose 25 per cent tariffs on American tablet computers would be damaging for US manufacturers, including Apple, the global market leader.

It might also provide opportunities for Chinese firms like Xiaomi, Lenovo and Huawei to boost sales and increase their profile on the world stage.