Trump pressures China with threat to crank up size of proposed tariffs

Trump pressures China with threat to crank up size of proposed tariffs

Trump pressures China with threat to crank up size of proposed tariffs

President Donald Trump this week ordered officials to consider imposing a 25 per cent tax on US$200 billion worth of imported Chinese goods, up from an initial 10 per cent rate.

The U.S. imposed 25 percent tariffs on $34 billion of Chinese products earlier this month, with plans to add another $16 billion of imports on Tuesday.

Trump's tariffs target goods the White House says benefit from industrial policies such as "Made in China 2025", which calls for developing Chinese competitors in robotic, artificial intelligence and other fields.

"Escalating tariffs against China is the wrong approach to address legitimate concerns U.S. businesses have with China's harmful practices", said Myron Brilliant, head of global affairs for the U.S. Chamber of Commerce.

It's unclear if the Chinese government is purposely pushing the value of its currency down or if that has been a market-based reaction to concerns about how USA tariffs could hurt China's economy. "If the USA takes measures to further escalate the situation, we will surely take countermeasures to uphold our legitimate rights and interests", spokesman Geng Shuang said at a regular press conference on Wednesday.

U.S. Commerce Secretary Wilbur Ross downplayed the impact of the tariffs on the American economy.

The GSO has however warned exporters and importers to be prepared for any eventuality given the ongoing trade war between the US and China. Beijing responded to news reports on Tuesday about the planned tariff increase by cautioning the USA against "blackmailing and pressuring" and it vowed to strike back at every escalation.

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The deliberations could be a sign that Trump is looking to intensify pressure in the trade standoff with Beijing even if it could significantly drive up costs on a wide range of products for American consumers. In this scenario, to which Moody's assigns a 60% probability, US gross domestic product would be reduced by about 0.1 percentage point at the peak of the trade confrontation, in mid 2019.

In retaliation, Beijing said it would also levy duties on an equal dollar amount worth of U.S. goods as well as increase regulation for American companies that are doing business in the country.

At a news briefing, Foreign Ministry spokesman Geng Shuang accused the usa of engaging in "blackmail", according to Reuters.

While raising the bar on countermeasures at each point, China has also knocked the doors of the WTO dispute settlement body with trade disputes against the US's illegal and unilateral crowbar trade measures.

Lighthizer noted that if tariffs are increased to 25 percent, they would be applied to the proposed list of products that were announced on July 10.

China's commerce ministry said the USA tactics will have no effect on China, and will disappoint countries that are against trade wars.

China's vice-trade minister Wang Shouwen said last month in Geneva that "for any talks to be successful, no party should point a gun at the other party". Furthermore, the massive, debt-financed tax cut enacted last December will only drive domestic consumption and make US assets more attractive to foreign buyers, all of which will widen the USA trade deficit much more than the limited tariffs imposed so far will shrink it. Officials say there will be a comment period for businesses and people affected by the tariffs.

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