China is threatening to impose tariffs on about $60 billion worth of U.S.-made products, in retaliation to the Trump administration's trade policies.
According to CNBC, China's Ministry of Commerce announced that the country might slap import taxes ranging from 5 percent to 25 percent on American agricultural goods, metals, and chemicals.
Politico reported that the duties might affect as many as 5,200 U.S.-made products. The 25 percent tariff would apply to almost half of the goods China imports from the United States, including lambs, honey, biodiesel and liquefied natural gas.
The threat is in response to President Trump's proposed tariffs of 10 percent to 25 percent on $200 billion worth of Chinese products. He argues that the duties are necessary to pressure China to give up its allegedly unfair trade practices and to return to the bargaining table to negotiate a new trade deal with the United States.
The tariffs would be in addition to the 25 percent tax on $34 billion worth of imports from China that Trump previously imposed. He recently vowed to apply the duty to another $16 billion worth of Chinese products.
The Ministry of Commerce explained on its website that “the implementation date (of China's retaliatory tariffs) will be subject to the actions of the U.S., and China reserves the right to continue to introduce other counter-measures.”
The statement continued: “China always believes that consultation on the basis of mutual respect, equality and mutual benefit is an effective way to resolve trade differences. Any unilateral threat or blackmail will only lead to intensification of conflicts and damage to the interests of all parties. Because the U.S. side has repeatedly escalated the situation despite the interests of both enterprises and consumers, China has to take necessary counter-measures to defend the country's dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries in the world.”
U.S. Trade Representative Robert Lighthizer is leading the administration's assessment of whether to impose more tariffs on China. “The president has directed that I consider increasing the proposed level of the additional duty from 10 percent to 25 percent,” he said. “The 25 percent duty would be applied to the proposed list of products previously announced on July 10.”
Lighthizer added: “The Trump administration continues to urge China to stop its unfair practices, open its market and engage in true market competition. We have been very clear about the specific changes China should undertake. Regrettably, instead of changing its harmful behavior, China has illegally retaliated against U.S. workers, farmers, ranchers and businesses.”
The trade official said the purpose of the tariffs is “to provide the administration with additional options to encourage China to change its harmful policies and behavior, and adopt policies that will lead to fairer markets and prosperity for all of our citizens.”
The White House is accepting public comments on the additional tariffs until Sept. 5, after which Lighthizer is set to make a decision. The course he chooses could have a dramatic impact on U.S. businesses, workers, and consumers.
Trump recently told CNBC that he might advocate tariffs on all Chinese imports, which amount to $505 billion worth of products. Many Republicans, as well as Democrats, have criticized the president for making such threats. Lawmakers representing agricultural states are particularly concerned about the growing trade war.
In an interview on Bloomberg TV, White House National Economic Council Director Larry Kudlow warned that Chinese officials “better not underestimate President Trump’s determination to follow through on our asks.” He said another meeting of Trump and Chinese leader Xi Jinping is possible “if the opportunity presents itself.” Kudlow noted that the president “enjoys bilateral discussions.”
The day before the Chinese ministry released its statement, the U.S. Commerce Department reported that the monthly trade deficit with China soared to $33.5 billion in June. Officials are worried that this year's annual deficit will exceed the record of $375 billion set in 2017.
“These are numbers … that are not sustainable; never even heard of in the history of the world,” Lighthizer testified to a Senate appropriations subcommittee. “These are such cataclysmic numbers that something has to be changed.”
When services are included in the equation, a computation known as the overall trade gap, the deficit in June was $46.3 billion — 7 percent worse than in the previous month. The overall gap is on pace to exceed last year's total of $552 billion.
During his 2016 campaign and since becoming president, Trump has repeatedly cited the deficit with China as evidence of trade deals and policies working against U.S. interests.
According to Politico, a majority of economists disagree. They believe the trade gap is largely a result of the United States' low savings rate and high consumption. They also point out that the gap typically grows when the U.S. economy is growing at a strong rate.