China vowed to fight back against the Trump administration’s plans to impose tariffs on an additional $200 billion in Chinese goods, escalating a trade war between the world’s two biggest economies. Beijing described the latest United States move as “totally unacceptable” bullying, and urged other countries to join China to protect free trade and multilateralism. China promised to lodge complaints at the World Trade Organization (WTO) but didn’t detail what its retaliatory measures would be.
“China is shocked at the US action,” the Commerce Ministry said in a statement on its website Wednesday. “To protect the core interests of the nation and its people, China’s government is, as in the past, forced to retaliate.”
The response came hours after the Trump administration released a proposed list of thousands of products on which it plans to impose 10-percent tariffs, ranging from vacuum cleaners and windshield wipers to sterling silver spoons and badger hair. The US omitted some high-profile items like mobile phones. The news sent markets skidding in Asia as Chinese stocks tumbled and the yuan weakened.
If the proposed tariffs go into effect after public consultations end on August 30, duties implemented by the administration aimed squarely at China will cover nearly half of all US imports from the Asian nation. Some members of Trump’s own Republican Party are calling the trade war unwise, while American businesses and economists warn it could derail the strongest global upswing in years.
Fresh US tariffs would also come at a time when the Trump administration is seeking Beijing’s help reining in North Korea’s nuclear-weapons program. With little sign of continued formal negotiations, the two powers appear headed toward a protracted trade conflict that may undermine growth and shake up corporate supply chains.
Li Yong, a senior fellow at the China Association of International Trade in Beijing said one retaliatory tactic China could deploy would be a bigger push to attract foreign investment, just not from the US.
“The US closed the door for negotiations,” Li said. “It’s up to them to open the door again.”
US officials argue they had no choice but to move forward on the new tariffs after China failed to respond to their concerns over unfair trade practices and Beijing’s abuse of American intellectual property, according to two senior officials who spoke to reporters. High-level talks between the world’s two largest economies starting in May failed to deliver a breakthrough to head off a trade war.
“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,” US Trade Representative Robert Lighthizer said in an e-mailed statement. “China has not changed its behavior—behavior that puts the future of the US economy at risk.”
The White House move drew immediate condemnation from Senate Finance Chairman Orrin Hatch, a Republican from Utah, who called it “reckless” and not “targeted.”
The Retail Industry Leaders Association, a lobbying group, said US businesses and consumers will lose from the administration’s trade battle. “American retailers and the families we serve barely had time to process the barrage of tariffs implemented last week,” Vice President of International Trade Hun Quach said in a statement. “Now, we will need to grapple with new tariffs on an additional $200 billion worth of imports, which are bound to include even more consumer products and everyday essentials.”
The Trump administration on July 6 imposed 25 percent duties on $34 billion in Chinese imports, the first time the president has implemented tariffs directly on Beijing after threatening to do so for months. The first round of tariffs covered Chinese products ranging from farming plows to machine tools and communications satellites.
China immediately retaliated with duties on the same value of US goods, including soybeans and cars.
In addition, the US is considering duties on a further $16 billion in Chinese goods, after a public hearing later this month. China has vowed to retaliate dollar-for-dollar to any further US tariffs.
“The internal political dynamics in both countries make it unlikely that either side will stand down and offer conciliatory measures that could deescalate tensions and lead to a resumption of negotiations,” Eswar Prasad, a professor of trade policy at Cornell University, said in an email.
So far, tariffs imposed by the two countries are expected to have a modest impact on growth and inflation, economists estimate. But duties on more than $200 billion in Chinese imports may push the trade war into territory where it begins to bite meaningfully into growth. A full-blown global trade war would shave 0.4 percentage point off world growth, according to Bloomberg Economics.
Trump has been considering tariffs against China since his officials concluded in March that Beijing violates US intellectual-property rights, such as by forcing American firms to hand over technology.
“Rather than address our legitimate concerns, China has begun to retaliate against US products. There is no justification for such action,” Lighthizer said.