The Office of the U.S. Trade Representative yesterday released a list of $200 billion worth of Chinese goods (comprising 6,031 tariff items) that could be subject to a new 10% import surtax in a move that if implemented would represent a massive escalation of President Trump’s burgeoning trade war with China.
A statement issued by USTR Robert Lighthizer said that the administration was taking the action “as a result of China’s retaliation and failure to change its practices.”
Last week, the U.S. imposed 25% tariffs on Chinese imports worth $34 billion – the first wave of an initial round of Section 301 tariffs worth an estimated $50 billion in total – to which Beijing responded with “proportionate” retaliatory tariffs on the same amount of U.S. goods.
The second wave of the initial round, applicable to roughly $16 billion worth of Chinese products related to the “Made in China 2025” industrial plan, as well as tariff subheadings that stakeholders recommended during the comment period, is set to be imposed in the coming weeks.
The USTR said that upping the ante with its latest threat to impose tariffs on an additional $200 billion worth of goods, “is an appropriate response under the authority of Section 301 to obtain the elimination of China’s harmful industrial policies.”
Government officials in Beijing said the U.S. threat was “totally unacceptable” and slammed the Trump administration’s behaviour as “typical trade bullying.” A Foreign Ministry spokesperson characterized the accelerating conflict as “a war between unilateralism and multilateralism, between protectionism and free trade, and between power and rules.”
“Holding on to the outdated zero-sum mentality and willfully launching the trade war not only undermines interests of the two parties directly involved, but also others in the global industrial chain, and there will be no winner,” Chinese officials warned.
While vowing to “work with the international community to jointly safeguard the multilateral trading system and rules,” Beijing said it “will be forced to impose necessary countermeasures” in the meantime “to protect the core interests of the nation and its people.”
President Trump has threatened that if, as is widely expected, the Chinese counter the tariffs on $200 billion worth of goods, an additional round of restrictions will hit still another $200 billion worth of Chinese goods. In the event all threats are realized, the U.S. will have slapped tariffs on more than 80% of all Chinese exports to the United States.
“For over a year, the Trump Administration has patiently urged China to stop its unfair practices, open its market, and engage in true market competition,” Lighthizer said in his statement. “We have been very clear and detailed regarding the specific changes China should undertake. Unfortunately, China has not changed its behavior – behavior that puts the future of the U.S. economy at risk. Rather than address our legitimate concerns, China has begun to retaliate against U.S. products. There is no justification for such action.”
Lighthizer said the administration was still willing to “engage in efforts that could lead to a resolution of our concerns about China’s unfair trade practices and to China opening its market to U.S. goods and services,” cautioning that meanwhile, “we will remain vigilant in defending the ability of our workers and businesses to compete on a fair and reciprocal basis.”
The USTR will hold a hearing August 20-23 about the contents of the proposed list. Aug. 30 is the due date for post-hearing rebuttal comments. The tariffs will not be imposed until after that deadline, according to administration officials. Requests to appear at the Aug. 20-23 hearing and pre-hearing submissions are due by July 27. Written comments are due by Aug. 17.
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