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Reminder: U.S. Tariffs on Chinese Goods Worth $16 Billion Now in Effect

Posted August 23, 2018

Even while Chinese and U.S. officials are meeting in Washington this week trying to defuse tensions, both sides continued escalating their increasingly costly trade war, as the Trump administration today slapped an additional 35% tariff on another $16 billion worth of imports from China, prompting Beijing to immediately respond with retaliatory tariffs on a matching amount of goods imported from the United States.

As reported previously, the latest U.S. tariffs covering 279 product categories – including semiconductors, plastics, chemicals and railway equipment – complete the first wave of levies on $50 billion worth of Chinese imports related to the administration’s Section 301 trade enforcement action against Beijing’s intellectual property practices and other “harmful industrial policies.”

China’s retaliatory list, which kicked in precisely one minute after the U.S. duties became effective today, covers 333 product categories including aviation fuels, coal, scrap copper and vehicles.

Charging that the latest U.S. tariffs are in violation of World Trade Organization rules, China’s Ministry of Commerce said it had today launched a complaint under the WTO’s dispute settlement mechanism “to safeguard free trade and multilateral mechanisms as well as its legitimate rights and interests.”

President Trump has proposed another possible round of tariff hikes involving 25% increases on an additional $200 billion of Chinese goods. In response, Beijing issued a smaller $60 billion list of American products for retaliation if Washington acts on Trump’s threat, reflecting the fact that China is starting to run out of U.S. goods to penalize owing to the lopsided balance of trade between the two countries.

China’s imports from the United States last year totaled about $130 billion. That leaves about $20 billion remaining for penalties after tariffs already imposed or planned on a total of $110 billion. As Commerce Secretary Wilbur Ross told CNBC yesterday: “At the end of the day, we have many more bullets than they do. They know it. We have a much stronger economy than they have, they know that too.”

However, in commentary today, state-run news agency Xinhua took issue with Ross’s negotiating calculus. “The maximum pressure approach featuring my-way-or-no-way logic and a zero-sum mentality has proved fruitless for China, and risks a renewed no-win prospect,” it said. Alluding to the U.S. Trade Representative’s marathon public hearings being held over several days this week, the article warned that “Washington cannot overlook the cries of U.S. industries affected or to be affected by its current confrontation with China.”

Chinese authorities have also said they will take “comprehensive measures,” which companies fear could mean targeting operations of American businesses in China for disruption (by subjecting imports to increased customs examinations or mobilizing consumer boycotts, for example).