Here's Why Trump Is Hiking Chinese Tariffs To 25%

06 August, 2018, 06:29 | Author: Natasha Holloway
  • The Trump administration ratcheted up pressure for trade concessions from Beijing this week by proposing a higher 25% tariff on $200 billion worth of Chinese imports

"They better not underestimate President Trump's determination to go further", Larry Kudlow said on Bloomberg Television.

Trade tensions between the United States and China have been on the rise since April 2017, when President Donald Trump directed the US Commerce Department to investigate whether imports of steel and aluminum from China and other countries threatened national security.

The US bilateral trade deficits also expanded with China, the European Union, Canada and Mexico - all of which have retaliated against Trump's aggressive tariffs.

Beijing said the timing of the new tariffs would depend on whether the United States follows through on its threat. European soybean imports from the US were likely to increase naturally.

The ministry reiterated that since the U.S. has ignored the interests of companies and consumers in both countries, China has to take the necessary countermeasures to safeguard the dignity and interests of its people, defend free trade and the multilateral system, and ensure the common interests of all the countries of the world.

The People's Bank of China has announced new requirements for certain types of trading in the yuan, measures that are aimed at stabilising the currency.

Trump initially proposed 10 percent tariffs on an additional $200 billion of Chinese imports, but he told trade officials this week to consider raising that to 25 percent. It echoes China's response to the previous round of tariffs last month, when the USA and China imposed tariffs on $34 billion worth of each others' goods.

Why is China threatening more tariffs?

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The bottom line: The tariffs do raise money for the USA government, but it's a small amount - and it's mostly being paid for by Americans.

During a July 20 CNBC interview, Trump said that he was willing to put tariffs on all $505.5 billion dollars worth of goods that China exports annually to the U.S. Last May, when talks were held in Washington, China agreed to increase its imports from the USA by up to $100 billion in return for at least a suspension of hostilities. Other emerging market economies will have no choice but to follow China's devaluation lead.

Trump then concluded: "China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs- because they are really hurting their economy".

China says the United States is deliberately creating the trade conflict, using bullying tactics, and ignoring worldwide negotiating norms so that it can stop the rise of China as an competitor on the world stage.

Other U.S. goods targeted by China in the latest list include semiconductors, some helicopters, small-to-mid-sized aircraft, condoms, iron ore, steel products, roasted coffee, sugar, foods containing chocolate, candies, and even vehicle windscreens.

Beijing's earlier round of tariffs appeared created to minimize the impact on the Chinese economy by targeting soybeans, whiskey and other goods available from Brazil, Australia and other suppliers.

For example, he claimed that China was financing advertisements to convince Americans to stop Mr Trump's trade agenda.

The US trade deficit increased in June, to $46.3 billion (R615 billion) from $43.2 billion in May, according to the US Census Bureau. The news came just after U.S. Secretary of State Mike Pompeo met with Chinese Foreign Minister Wang Yi in Singapore. The Trump administration is weighing an additional round of tariffs on $200 billion of Chinese goods.

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