America and China and their Trade Tarrifs

America and China and their Trade Tarrifs

 

IT WAS only a matter of time before China hit back at the United States amid their growing trade war. The Chinese Communist Party has announced it will levy tariffs on $US60 billion ($AU83 billion) worth of American goods, following President Donald Trump’s decision to raise tariffs on $200 billion of Chinese imports. The Ministry of Commerce has announced plans to impose a 10 per cent tariff on 3571 goods from the US, and five per cent on another 1636 US products. The new tariffs, which will come into effect on September 24, mark the latest move in an increasingly volatile trade dispute between the world’s two largest economies.

 

In a press conference, China’s foreign affairs spokesman Geng Shuang said Beijing had to do this to “safeguard its legitimate and legal rights and interests and uphold the global free trade order”. “We hope the US will realise the negative consequences of its actions and take credible means to correct them in a timely manner,” he added.  He said any additional countermeasures would be announced “at an appropriate time”.

China has hit back at the US amid a growing trade war.

Chinese news outletThe China Daily has warned Mr Trump’s administration would be making a “serious mistake” if it tried to force China into making major trade decisions through tariffs.   “Underestimating China’s resolve to safeguard its legitimate interests, the United States will find its protectionist measures backfiring to harm its own industries and the American people, as indicated by the swift response of American business groups that condemned US President Donald Trump’s plans to impose tariffs on another $200 billion worth of Chinese imports from Monday,” the newspaper said.

 

“The trade conflict will not force China to succumb to US pressure. Instead, given its economic resilience, it will squarely face those challenges, find the right solutions, and emerge stronger.”  The news hasn’t gone down well in Australia. The Reserve Bank has warned that the trade war is emerging as an economic threat.  Meanwhile, Trade Minister Simon Birmingham has described Mr Trump’s new tariffs on the US as a “concerning development”, saying both countries have a responsibility to end the dispute.  “Today’s announcement from the United States is a concerning development and we urge all parties to step back from further escalating tariffs and to tackle trade distorting subsidies or other issues,” Senator Birmingham said.

 

“Australia’s strong and growing economy – some 27 consecutive years of economic growth – is an example to the world of looking outwards, of engaging and of seizing export opportunities and the benefits that come from trade and investment.”

 

WHAT IS HAPPENING?

The Trump administration announced the tariffs on some 5000 Chinese-made goods will start at 10 per cent, beginning Monday. They rise to 25 per cent from January 1.   Donald Trump has decided to impose tariffs on $200 billion worth of Chinese imports. Picture: AFPSource:AFP  China released a statement in response saying the tariff hike “brings new uncertainty to the consultations”.  The US has complained that Chinese industry development plans including a push to be global champions in robotics and other fields, are based on stolen technology.

 

American companies and trading partners including the European Union and Japan have longstanding complaints about Chinese market barriers and industrial policy.  But they object to Trump’s tactics and warn the dispute could chill global economic growth and undermine international trade regulation.

 

WHY IT’S BAD NEWS

The American Chamber of Commerce in China warned Washington is underestimating Beijing’s determination to fight back.

“The downward spiral that we have previously warned about now seems certain to materialise,” said the chamber chairman, William Zarit, in a statement.

China has promised to retaliate against the US, in an escalating fight that has economists worried. Picture: AP

China has promised to retaliate against the US, in an escalating fight that has economists worried. Picture: APSource:AP

Trump imposed 25 per cent duties on $50 billion of Chinese imports in July. Beijing retaliated with similar penalties on the same amount of American goods.  The duties targeted Chinese goods Washington says have benefited from improper industrial policies. Beijing’s penalties hit soybeans and other farm goods from states that voted for Trump in 2016.

 

Mr Trump threatened to add a further $267 billion in Chinese imports to the target list if China retaliated — which it now has.  That would raise the total affected by American penalties to $517 billion — covering nearly everything China sells the United States.

Asian markets were mixed on Tuesday after Donald Trump ordered tariffs on $200 billion more in Chinese goods, ramping up tensions between the world's top two economies. Picture: AP

Asian markets were mixed on Tuesday after Donald Trump ordered tariffs on $200 billion more in Chinese goods, ramping up tensions between the world’s top two economies. Picture: APSource:AP

 

“Contrary to views in Washington, China can — and will — dig its heels in and we are not optimistic about the prospect for a resolution in the short term,” said the American Chamber of Commerce. “No one will emerge victorious from this counter-productive cycle.”  The chamber appealed to both governments for “results-oriented negotiations”.

 

WESTERN COMPANIES HURTING

As Beijing runs out of US goods for retaliation, American companies say regulators are starting to disrupt their operations.  Last week, the American Chambers of Commerce in China and in Shanghai reported 52 per cent of more than 430 companies that responded to a survey said they have faced slower customs clearance and increased inspections and bureaucratic procedures.  Mr Trump has strained relations with potential allies including the European Union, Canada and Mexico by raising tariffs on imported steel and aluminium.  He demanded Canada and Mexico renegotiate the North American Free Trade Agreement to make it more favourable to the United States.

 

 Gavin Fernando@GavinDFernando

 

Article Source – https://www.news.com.au/finance/economy/world-economy/donald-trumps-strict-tariffs-upset-china-which-has-promised-to-make-america-pay/news-story/348eb4ca9f433d4c6173e74dc80deab1