Trump announces $50bn in China tariffs, escalating possibility of trade war

 

Powered by Guardian.co.ukThis article titled “Trump announces $50bn in China tariffs, escalating possibility of trade war” was written by Dominic Rushe in New York, for theguardian.com on Friday 15th June 2018 20.35 Asia/Kolkata

Donald Trump has announced a 25% tariff on $50bn of Chinese goods, triggering a promise of immediate retaliation from China. The move, after a long war of words, increases the possibility of a full trade war between the world’s two leading economies.

In a statement, the White House said the tariffs would be levied on goods that “contain industrially significant technologies”. The administration warned it would pursue further levies if China retaliates.

Trump said the US’s trade relationship with China was “no longer sustainable”.

“My great friendship with President Xi [Jinping] of China and our country’s relationship with China are both very important to me,” said Trump. “Trade between our nations, however, has been very unfair, for a very long time.

“The United States can no longer tolerate losing our technology and intellectual property through unfair economic practices.”

In a statement on its website, the Chinese commerce ministry said: “China is unwilling to have a trade war, but the Chinese side has no choice but to strongly oppose this, due to the United States’ myopic behaviour that will harm both parties.”

The measures harm the interests of both countries and disrupt world trade, the statement said, adding: “We will immediately introduce tariff measures of the same scale and strength. All the results from the negotiations previously reached by the two parties will be invalid.”

A list of targeted products issued on Friday by the US Trade Representative’s Office (USTR) focuses on products that contribute to China’s “Made in China 2025” initiative – Beijing’s ambitious plan to upgrade its manufacturing and technology base and grow its own pharmaceutical sector.

The plan, which relies heavily on state subsidies, has called “an existential threat to US technological leadership,” by the Council of Foreign Relations think tank. Critics charge it relies on the theft of intellectual property and unfair trade practices by the Chinese and White House trade adviser Peter Navarro, a persistent critic of China, has called it a plan to “dominate every single emerging industry of the future.”

Made in China 2025 was mentioned 100 times in the USTR’s March report on China’s trade practices, which formed the basis for Friday’s announcement and was highly critical of China.

USTR said $34bn worth of imports from China in aerospace, automobiles, communications tech, new materials and robotics would be subject to tariffs from July 6. Another $16bn of imports are undergoing further review.

Trump met his top trade advisers on Thursday to decide when to activate the tariffs, which come as relations with other major trading partners, Canada, the EU and Mexico, have worsened following a fractious meeting of the G7 leaders.

Earlier this week, Trump told Fox News he was “very strongly clamping down on trade” with China. Speaking to Fox & Friends on Friday, he said: “We’re getting on great with China, probably until this morning because we just did a big tariff on China, but that’s OK because I have a wonderful relationship with President Xi. We’ll all work it out. He understands it’s unfair.

“They can’t believe they got away with it for so long. They can’t believe it. They got away with it for 25 years. I’m not just blaming Obama – I’m blaming many presidents and leaders. It should’ve never happened.”

The move is aimed at cutting the US trade deficit with China. China attempted to lessen the levies earlier this month by offering to purchase about $70bn worth of commodities and manufactured goods.

Advisory firm Oxford Economics said the tariffs came “at a bad time for the world economy”.

“While the economic impact of the US tariffs and ensuing retaliation by China will be modest, it does matter,” it wrote in a briefing note.

Oxford Economics calculates that the short-term economic impact of the dispute is likely to be modest, lowering growth by a fraction of a percent in both countries.

“However, such numbers still matter, and the increased uncertainty and risks will weigh on business confidence and investment, especially cross-border investment. Thus, there will be an impact on growth, in China, the US and elsewhere, at a sensitive time for the global economy,” they wrote.

The escalating trade spat comes as farmers and others are increasingly concerned about the impact of a trade dispute both with China and the the US’s other major trading partners.

It comes after a contentious meeting of the G7 world leaders in Canada last week that ended with Canada’s prime minister Justin Trudeau calling the US’s recently imposed tariffs on steel and aluminum “insulting” to the countries’ long-standing alliance. In retaliation the US refused to sign a joint communique following the meeting and Navarro said there was a “special place in hell” for any leader who engaged in “bad faith diplomacy” with Trump. He later apologised.

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Trump announces $50bn in China tariffs, escalating possibility of trade war - NORTH INDIA KALEIDOSCOPE

Rajesh Ahuja

I am a veteran journalist based in Chandigarh India.I joined the profession in June 1982 and worked as a Staff Reporter with the National Herald at Delhi till June 1986. I joined The Hindu at Delhi in 1986 as a Staff Reporter and was promoted as Special Correspondent in 1993 and transferred to Chandigarh. I left The Hindu in September 2012 and launched my own newspaper ventures including this news portal and a weekly newspaper NORTH INDIA KALEIDOSCOPE (currently temporarily suspended).