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US imposes tariffs on $200 billion in Chinese goods
Sep. 18, 2018
The Trump administration on Monday announced new tariffs on $200 billion in Chinese imports, a sharp escalation of its trade fight with Beijing that will also exact costs on a wide range of American businesses and consumers.
The new tariffs, to take effect next Monday, would initially be set at 10%, but climb to 25% in the new year. With Trump already having slapped 25% tariffs on about $50 billion of Chinese goods, the United States by next week will have imposed significant taxes on about half of all Chinese merchandise entering American borders.
Trump said Monday he was prepared to ratchet up the pressure if China retaliates. Beijing previously said that it would respond with counter-tariffs on an additional $60 billion of U.S. imports.
“If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports,” Trump said in a statement.
Treasury Secretary Steven T. Mnuchin last week sent overtures to Beijing for renewed high-level trade talks, possibly later this month, but Trump’s announcement Monday could scuttle the proposed meetings. As with the previous round, Trump issued the new duties based on the administration’s findings that China has long engaged in unfair practices hurting U.S. intellectual property, including forcing firms to hand over technologies to have access to the large Chinese market.
“It looks like both sides are digging in for protracted tensions,” said David Loevinger, a managing director at TCW Emerging Markets Group in Los Angeles and formerly a senior Treasury Department official for China affairs.
The earlier round of tariffs, in two tranches, affected mostly Chinese machinery and industrial parts, intermediary materials and components largely invisible to consumers. But the new duties will ensnare roughly 5,000 products, including many ordinary household goods.
In anticipation of more tariffs on Chinese goods, many U.S. importers and retailers have stepped up their purchases in recent weeks. That could help keep prices of merchandise in check during the Christmas season.
In addition, the new 10% tariffs will be mitigated somewhat by the recent change in currency exchange rates. Since April, the U.S. dollar has appreciated by about 9% against the Chinese yuan, which means goods from China are cheaper when they are bought with U.S. dollars.
Even so, by next spring, some business people say, the tariff hikes are likely to be passed on to consumers. That’s what Arnold Kamler, owner of Bicycle Corp. of America, fully expects.
Kamler imports about 2.5 million bikes from China and also makes about 350,000 bikes a year at his factory in South Carolina. He hopes to expand domestic production, but is not sure how much he can at this point. The new taxes will not only hit his imported products, he said, but practically all the parts, including handlebars and chains, that he imports for assembly in South Carolina, where he employs 167 workers.
“We’re all trying to get as much merchandise before the tariffs,” Kamler said.
Other products subject to tariffs include such varied items as vacuum cleaners, baseball gloves and frozen fish. The U.S. Trade Representative issued a preliminary list of merchandise facing the new tariffs on July 10, but that was whittled down after U.S. officials received about 6,000 public comments and heard from about 350 witnesses over six days of hearings.
Among the 300 goods removed were smartwatches, such as the Apple Watch, and unspecified consumer electronic devices that use Bluetooth, as well as some chemicals used in manufacturing and agriculture, and consumer safety products such as bicycle helmets and child car seats.
Administration officials said they started with a 10% tariff rate to give businesses time to find alternative suppliers and make adjustments before the 25% rate took effect. But in many cases, it will take companies a lot longer than a few months to shift supply chains or move production to avoid higher costs.
Read more at Los Angeles Times
Source: Los Angeles Times
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