The Trump administration threatened to slap 10 percent tariffs on $200 billion worth of Chinese imports Tuesday, a move that pushes the economic giants closer to a mutually destructive all-out trade war.
Beijing labelled the announcement “completely unacceptable” and vowed to “fight back as usual.” Stocks fell on the news, as analysts warned that the breakout of a full-blown trade war between the world’s two largest economies could derail the global economy.
The proposed tariffs cover an exhaustive list of Chinese goods: from coal, tires, television components, food products and chemicals through to more niche products like dog food and bull semen. Taken together with $50 billion in levies previously announced by Washington, the tariffs stand to raise prices on nearly half of everything Americans buy from China, according to Bloomberg.
“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,” U.S. trade representative Robert Lighthizer said in announcing the move.
“Rather than address our legitimate concerns, China has begun to retaliate against US products ... There is no justification for such action.”
The move follows Trump’s pledge to retaliate against any Chinese response to U.S. tariffs imposed last week.
After months of negotiations, Washington finally followed through on threats to impose a 25 percent duty on $34 billion worth of Chinese goods Friday, with Beijing immediately returning fire by imposing equivalent levies on U.S. products.
Labeling the Trump administration “a gang of hoodlums,” Beijing said at the time that Washington had kicked off “the largest trade war in economic history.” Each side is already planning levies on a further $16 billion in goods that would bring the totals to $50 billion.
The $200 billion targeted in the latest threatened tariffs is much larger than the total value of American goods imported by China, which will mean Beijing will need to take a different tack with any response. These could include higher tariffs, ramping up inspections, cancelling purchase orders or even encouraging consumer boycotts — a move that could unleash dangerous forces of economic nationalism on both sides.
The new U.S. list is subject to a two-month comment period before it comes into effect, giving both sides the opportunity to weigh their next move. But with both leaders loathe to take a backwards step, it looks destined to get uglier. Trump has said he’s prepared to impose tariffs on more than $500 billion of Chinese products — virtually the entire amount of goods that Americans buy from China — while Chinese President Xi Jinping has promised to match him blow-for-blow. Beijing has repeatedly said its economy is more prepared to handle a trade war than its rival.
Some business groups and politicians in the U.S. were critical of the Trump administration’s approach. Senate Finance Committee Chairman Orrin Hatch said the threat of new tariffs “appears reckless and is not a targeted approach.” The Senate is set to vote Wednesday on a resolution aimed at curbing Trump’s abilities to unilaterally impose tariffs, according to Sen. Jeff Flake. But the measure — a so-called “sense of the Senate motion” — is non-binding, and is intended to send a signal to the President rather than create any actual restraints on his powers.
Cover image: Donald Trump and China's President Xi Jinping (not shown) make a joint statement at the Great Hall of the People on November 9, 2017 in Beijing, China. Trump is on a 10-day trip to Asia. (Thomas Peter-Pool/Getty Images)