U.S. imposes new $200 billion tariffs on China

China warns it has no choice but to retaliate against the latest round of US tariffs but did not specify how. — Reuters pic

U.S. imposes new $200 billion tariffs on China

In this Sunday, Sept. 16, 2018, photo, a driver looks out from his trishaw decorated with an American flag and Chinese flags in Beijing. If we have those tariffs in place American companies will be able to make things and American workers will make them with their hands.

President Trump opened up a new front his trade war with China by announcing plans to slap tariffs on $200 billion worth of Chinese-made goods.

The tariffs will be 10 percent until the end of the year then go to 25 percent to allow businesses to adjust.

But Juscelino F. Colares, a scholar of worldwide trade at Case Western Reserve University School of Law, said a get-tough posture from an American president was long overdue.

The United States and China have been engaged in an ongoing trade war after the Trump administration imposed tariffs on the country over theft of intellectual property.

The Chinese are expected to retaliate with commensurate tariffs on $60 billion in U.S. goods, and may withhold vital raw materials to USA firms.

In an earlier round of tariffs on $50 billion of goods, the Trump administration removed proposals on flat-panel television sets from the final list in June.

"Tariffs have put the U.S.in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been nearly unnoticeable", the president tweeted. That would raise the total to $517 billion - covering almost everything China sells the United States.

Some products - such as smart watches, Bluetooth devices, bike helmets, high chairs and play pens - were exempted from the tariffs after lobbying from companies including tech giant Apple and the chemical industry.

Republican party United States politicians urged the Trump administration to pursue negotiations with China to resolve trade differences, while applauding Trump's tough stance on Chinese intellectual property and trade practices.

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If the USA and China are unable to reach an agreement, UBS said: "We see a multilane expressway to further escalation and substantive negative economic effects to both countries". The US also asserts that Beijing uses state money to buy American technology at prices unaffordable for private companies.

Trump didn't otherwise elaborate on the announcement, which he described after complaining about the USA trade deficit with China.

Trump also has complained about America's massive trade deficit - $336 billion past year - with China, its biggest trading partner. But Trump quickly backed away from the truce. "If tariffs were to go to 25% later this year on $200 billion of imports, that would work into inflationary pressure and damage the U.S. consumer".

"If China decides to cancel new trade talks in response to USA trade tariffs action, the Dollars would likely recover most of its recent losses", CBA's Elias Haddad said. But many analysts say his combative actions seem unlikely to succeed. "Part of the recent slowing is that the Chinese were letting the yuan weaken, but since they effectively called a halt to weakening in the currency we've seen things calm down", said Kit Juckes, chief foreign exchange strategist at Société Générale.

China vowed to retaliate against the new round of tariffs announced Monday by Trump.

Still, he said, the USA economy appears strong enough to withstand the damage. Prime Minister Justin Trudeau defended regulations on the country's dairy market, an issue the USA has signaled it will not be quick to budge on. "Fortunately, the USA economy is humming, so we don't have to worry as much about what this will do to our economy".

According to a preliminary list of goods released by the US Trade Representative's office in July, in just a few examples, Washington is considering putting tariffs on roughly $40 billion in Chinese-made voice data receivers, computer memory modules, automatic data processors, and accessories for office equipment such as copiers and bank note dispensers - instantly making widely used goods more expensive.

In a statement, Mr Trump insisted China's trade practices "plainly constitute a grave threat to the long-term health and prosperity of the United States economy".

Trump said his administration is taking this action as a result of the Section 301 process that the USTR has been pursuing for more than 12 months.

"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 Zarit of the American Chamber of Commerce. Some will likely move to other low-priced countries that aren't in the line of fire. No one knows if a politically divided United States will serve to undercut Trump's aggressive tactics.

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