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Abu Dhabi, UAETuesday 23 October 2018

Donald Trump hits China with biggest tariffs yet as US imposes $200bn on goods

US president escalates trade war with Beijing by imposing 10% tariffs on Chinese imports

Donald Trump has been accused of using hostile rhetoric about Muslims and immigrants more broadly. AFP
Donald Trump has been accused of using hostile rhetoric about Muslims and immigrants more broadly. AFP

US president Donald Trump escalated his trade war with China on Monday, imposing 10 per cent tariffs on about $200 billion worth of Chinese imports.

But Mr Trump spared some consumer goods as smart watches from Apple and Fitbit and other products such as bicycle helmets and baby car seats escaped a levy.

The US president, in a statement announcing the new round of tariffs, warned that if China takes retaliatory action against American farmers or industries.

"We will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports," he said.

The iPhone was not among the 'wide range' of products that Apple told regulators would be hit by the $200bn round of tariffs in a September 5 comment letter to trade officials.

But if the Trump administration enacts a further round of tariffs on $267bn in goods, engulfing all remaining US imports from China, the iPhone and its competitors would not likely be spared.

Collection of tariffs on the long-anticipated list will start Septmeber 24 but the rate will increase to 25 per cent by the end of 2018, allowing US companies some time to adjust their supply chains to alternate countries, a senior administration official said.

So far, the US has imposed tariffs on $50 billion worth of Chinese products to pressure China to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies. Beijing has retaliated.

The escalation of Mr Trump's tariffs on China comes after talks between the world's two largest economies to resolve their trade differences produced no results. US Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.

"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," Mr Trump said in his statement. "But, so far, China has been unwilling to change its practices."

An investor sits in front of an electronic board displaying stock prices at a brokerage house in Beijing. AP Photo
An investor sits in front of an electronic board displaying stock prices at a brokerage house in Beijing. AP Photo

Fang Xinghai, vice chairman of China's securities regulator, told a forum in the Chinese port of Tianjin on Tuesday that he hopes the two sides can sit down and talk, but added that the latest US move has "poisoned" the atmosphere for negotiations.

Chinese Vice Premier Liu He will convene a meeting in Beijing on Tuesday morning to discuss the government's response, Bloomberg News reported, citing a person briefed on the matter.

A senior Trump administration said the US was open to further talks with Beijing, but offered no immediate details on when any new meetings may occur.

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"This is not an effort to constrain China, but this is an effort to work with China and say, 'It's time you address these unfair trade practices that we've identified that others have identified and that have harmed the entire trading system,'" the official said.

China has vowed to retaliate further against any new US tariffs, with state-run media arguing for an aggressive "counterattack".

China's yuan currency slipped 0.3 per cent against the dollar in Asian trade on Tuesday. It has weakened by about 6.0 per cent since mid-June, offsetting the 10 per cent tariff rate by a considerable margin.

Tariffs will be set at 10 per cent.  AFP 
Tariffs will be set at 10 per cent. AFP

Consumer tech trimmed

The US Trade Representative's office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories, but administration officials said the total value of the revised list would still be "approximately $200 billion".

A broad, $23 billion category of internet-connected devices will remain subject to tariffs, but some products, such as smart watches, Bluetooth devices, and other consumer-focused technology products were removed following a lengthy public vetting period during which more than 6,000 comments were received.

Also spared from the tariffs were Chinese inputs for US-produced chemicals used in manufacturing, textiles and agriculture.

Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor and baby car seats and playpens from Graco Inc also were taken off the list.

But the adjustments did little to appease technology and retail groups who argued that the tariffs would hit consumers hard.

"President Trump’s decision to impose an additional $200bn is reckless and will create lasting harm to communities across the country," said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.

The Retail Industry Leaders Association pointed out that the new tariffs would still hit more than $1bn worth of gas grills from China, $843m worth of luggage and travel bags, $825m worth of mattresses, and $1.9bn worth of vacuum cleaners.

"Tariffs are a tax on American families, period," said Hun Quach," RILA's vice president for international trade. "Consumers – not China – will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen."

Republican party US politicians urged the Trump administration to pursue negotiations with China to resolve trade differences, while applauding Trump's tough stance on Chinese intellectual property and trade practices.

"The sooner President Xi and President Trump meet to craft a new trade path forward, the better," said Representative Kevin Brady, chairman of the House Ways and Means Committee.