US China trade

US$50 Billion in New Tariffs Could Lock China Out of US Markets

If the Chinese government was hoping to see US President Donald Trump blink in the ongoing trade dispute, those hopes have been dashed.

Trump is seeking to ratchet up pressure on China for trade concessions by proposing a higher 25% tariff on US$200 billion worth of Chinese imports, his administration says.

A bit of quick maths reveals that works out to US$50 billion (AU$67 billion) in fees.

Ouch.

US Trade Representative Robert Lighthizer says Trump directed the increase from a previously proposed 10% duty because China has refused to meet US demands and has imposed retaliatory tariffs on US goods.

As Lighthizer said in a statement:

The increase in the possible rate of the additional duty is intended to provide the administration with additional options to encourage China to change its harmful policies and behaviour and adopt policies that will lead to fairer markets and prosperity for all of our citizens.’

There have been no formal talks between Washington and Beijing for weeks over Trump’s demands that China make fundamental changes to its policies on intellectual property protection, technology transfers and subsidies for high technology industries.

Two Trump administration officials told reporters on a conference call that Trump remains open to communications with Beijing.

We don’t have anything to announce today about a specific event, or a specific round of discussions, but communication remains open and we are trying to figure out whether the conditions present themselves for a specific engagement between the two sides,’ one of the officials said.

Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said a 25% tariff rate is more likely to shut out Chinese products and shift American supply chains to other countries, as a 10% duty could be offset by government subsidies and weakness in China’s yuan currency.

If we’re going to use tariffs, this gives us more flexibility and it’s a more meaningful threat,’ he said, adding that Trump’s pressure strategy will not work if he does not resolve trade disputes with US allies such as the European Union, Mexico and Canada.

The higher tariff rate, if implemented, would apply to a list of goods valued at $US200 billion identified by the USTR last month as a response to China’s retaliatory tariffs on an initial round of US tariffs on $US34 billion worth of Chinese electronic components, machinery, autos and industrial goods.

The Australian Tribune with RAW

 PS: Tired of seeing your wages, investments and interest gains all sapped by tax? Had enough of job-creating companies being driven overseas by Australia’s heavy tax burden? Then you should read our free new research report, ‘What you could do to stop Australia’s Tax Freedom Day from blowing out even further in 2018’. You can download that report free, here. 

Comments: 0

Your email address will not be published. Required fields are marked with *