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China hits back with tariffs on US$60 billion worth of US goods

China hits back with tariffs on US$60 billion worth of US goods

The world's two largest economies have engaged in a tit-for-tat tariff war. (Photo: AFP/Fred Dufour)

BEIJING: China said on Monday (May 13) it will impose higher tariffs on a range of US goods, striking back in its trade war with Washington shortly after US President Donald Trump warned it not to retaliate.

Beijing will impose tariffs ranging from 5 per cent to 25 per cent on a total of 5,140 American products worth about US$60 billion. The tariffs will take effect on Jun 1, said China's finance ministry. 

An additional tariff of 25 per cent will be levied against 2,493 goods including liquefied natural gas, the ministry said, and an additional tariff of 20 per cent will be imposed on 1,078 products.

Beijing previously set additional rates of 5 per cent and 10 per cent on 5,207 US products worth US$60 billion in September, and warned at the time that it would counter any higher tariffs imposed by Washington on Chinese products.

"China's adjustment on additional tariffs is a response to US unilateralism and protectionism," the ministry said. "China hopes the US will get back to the right track of bilateral trade and economic consultations and meet with China halfway."

The United States on Friday activated a new 25 per cent duty on more than 5,700 categories of products from China, even as top Chinese and US negotiators resumed trade talks in Washington.

US President Donald Trump had ordered the new tariffs, saying China "broke the deal" by reneging on earlier commitments made during months of negotiations. China has denied the allegations.

He also also ordered US Trade Representative Robert Lighthizer last week to begin imposing tariffs on all remaining imports from China, a move that would affect an additional US$300 billion worth of goods.

READ: Trump orders tariff hike on remaining Chinese imports

Earlier on Monday, China's government said that the country would never surrender to external pressure.

"We have said many times that adding tariffs won't resolve any problem. China will never surrender to external pressure. We have the confidence and the ability to protect our lawful and legitimate rights," foreign ministry spokesman Geng Shuang told a daily news briefing, responding to a question on Trump's threat of putting duties on all Chinese imports.

READ: Trump warns China not to retaliate against tariff hike

READ: Trump's China trade stance has political risks as he seeks re-election

State media also kept up a steady drumbeat of strongly-worded commentary on Monday, reiterating that China's door to talks was always open, but vowing to defend the country's interests and dignity.

"At no time will China forfeit the country's respect, and no one should expect China to swallow bitter fruit that harms its core interests," China's top newspaper, the ruling Communist Party's official People's Daily, said in a commentary.

State television said in a separate commentary that the effect on the Chinese economy from the US tariffs was "totally controllable".

"It's no big deal. China is bound to turn crisis to opportunity and use this to test its abilities, to make the country even stronger."

The editor of China's Global Times Hu Xijin wrote on his Twitter: "China may stop purchasing US agricultural products and energy, reduce Boeing orders and restrict US service trade with China," 

"Many Chinese scholars are discussing the possibility of dumping US Treasuries and how to do it specifically," he added. 

READ: US-China relations have entered a new and more fractious phase, a commentary

Beijing's response rattled already jittery investors who were caught off guard by last week's breakdown of efforts to reach a trade deal between the world's biggest economic powers. 

"With rising protectionist measures, the damage to economic growth is increasing," said Stephen Gallagher, US chief economist at Societe Generale in New York. 

Gallagher estimated the latest round of US and Chinese tariffs may reduce global economic growth by 0.15 per cent. 

Ahead of talks last week, China wanted to delete commitments from a draft agreement that Chinese laws would be changed to enact new policies on issues from intellectual property protection to forced technology transfers. That move dealt negotiations to resolve the trade dispute a major setback.

Trump has since defended the tariff hike and said he was in "absolutely no rush" to finalise a deal.

Despite Trump's insistence China will absorb the cost of the tariffs, it is US businesses that will pay them and likely pass them on to consumers. It may take three or four months for that pain to be felt, economists and industry consultants say.

At the same time, the Trump administration has rolled out up to US$12 billion in aid for US farmers hurt by Chinese tariffs against US soybeans and other agricultural products during the 10-month trade war, and indicated that more could be on the way.

White House economic adviser Larry Kudlow said on Sunday that there was a "strong possibility" Trump will meet Chinese President Xi Jinping at a G20 summit in Japan in late June.

Wall Street stocks plunged Monday, with losses on Nasdaq exceeding 3 per cent, after China made the announcement.

About an hour into the trading session, the Dow Jones Industrial Average was down nearly 530 points, or 2.0 per cent, at 25,412.74.

Source: AGENCIES/nc/ic/hm/gs/ad


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