After Trump’s new tariffs, Beijing retaliates by imposing fresh taxes of its own, escalating the trade war between China and the US.
U.S. President Donald Trump tweeted that tariffs of 10% on certain Chinese imports would rise to 25% on Friday, and $325bn of untaxed goods could face 25% duties “shortly.”
Trump also cited talks on US-China trade deal moving “too slowly”:
….of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!
— Donald J. Trump (@realDonaldTrump) May 5, 2019
The countries had appeared to be close to striking a deal in recent weeks. Negotiations in Beijing in April were hailed by U.S. Treasury Secretary Steven Mnuchin as “productive”, yet, Sunday’s statement by Trump increases pressure on China as Vice-Premier Liu He prepares to resume talks in Washington in the next few days.
After the Trump administration blacklisted the Chinese tech firm, Google took a huge blow towards Huawei by is restricting its access to its Android operating system and apps.
Sticking points and the China response
Thus far, the U.S. has placed tariffs on $250bn of Chinese goods, having accused the country of unfair trade practices.
Beijing responded with duties on $110bn of goods, blaming the U.S. for starting “the largest trade war in economic history.”
According to reports, in recent days U.S. officials have become frustrated by China seeking to renege on earlier commitments made over a deal. Those same reports cite key sticking points as how to police any deal, and whether existing tariffs will be removed or stay in place.
Recently, China announced it will be imposing new retaliatory tariffs on $60 billion worth of U.S. goods just days after the Trump administration said it would impose higher tariffs on $200 billion in Chinese goods.
U.S. stock markets plunged on the news, with the Dow Jones Industrial Average falling by up to 580 points in the first hour of trading Monday. The Nasdaq composite fell by about 3 percent in that same time.
China’s latest tariffs will take effect on June 1, adding up to 25% to the cost of U.S. goods that are covered by the new policy from China’s State Council Customs Tariff Commission.
The latest tit-for-tat exchange comes as trade talks have failed to yield a deal.
Full-blown trade war?
President Trump’s latest move would raise duties on more than 5,000 products made by Chinese producers, ranging from chemicals to textiles and consumer goods.
The U.S. president originally imposed a 10% tariff on these goods in September that was due to rise in January, but postponed this as negotiations advanced.
Both U.S. and international firms have said they have felt the effects of the trade dispute.
The International Monetary Fund (IMF) has warned a full-blown trade war between the countries would significantly weaken the global economy.
U.S. stocks are set for the worst drop in 4 months after China retaliated with fresh tariffs in the ongoing trade dispute. The Nasdaq is off 3% https://t.co/ApyTg75pgJ pic.twitter.com/MJFs3BfikR
— Bloomberg (@business) May 13, 2019
