China, in a tit-for-tat response to US president Donald Trump's tariffs on imports of steel and aluminum, raised import duties on a $3 billion list of US pork, fruit and other products. The move seems to have escalated the tariff dispute between the two countries and companies worry that it might depress global commerce.
The tariffs, to take effect on Monday, were announced late on Sunday by China's finance ministry and matched a list of potential tariffs on up to $3 billion in US goods published by China on 23 March.
Soon after the announcement, an editorial in Chinese tabloid Global Times warned that if the US had thought China would not retaliate or would only take symbolic counter-measures, it can now "say goodbye to that delusion".
"Even though China and the US have not publicly said they are in a trade war, the sparks of such a war have already started to fly," the editorial said.
China's Ministry of Commerce said it was suspending its obligations to the World Trade Organisation (WTO) to reduce tariffs on 120 US goods, including fruit and ethanol. The tariffs on those products will be raised by an extra 15 percent.
Eight other products, including pork and scrap aluminium, will now be subject to additional tariffs of 25 percent, it said, with the measures effective from 2 April.
The tariff spat is one aspect of wide-ranging tensions between Washington and Beijing over China's multibillion-dollar trade surplus with the United States and its policies on technology, industry development and access to its state-dominated economy.
Forecasters say the immediate impact should be limited, but investors worry the global recovery might be set back if it prompts other governments to raise import barriers. Those fears temporarily depressed financial markets, though stocks have recovered some of their losses.
Trump to unveil China tariff list, targeting tech goods
The Trump administration this week will unveil the list of Chinese imports targeted for US tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world's two largest economies, according to Reuters.
The list of $50 billion to $60 billion worth of annual imports is expected to target "largely high-technology" products and it may be more than two months before tariffs take effect, administration officials have said.
The US Trade Representative's office needs to unveil the list of products by Friday under Trump's China tariff proclamation.
The tariffs are aimed at forcing changes to Chinese government policies that USTR says results in the "uneconomic" transfer of US intellectual property to Chinese companies.
The agency's "Section 301" investigation authorising the tariffs alleges China has systematically sought to misappropriate US intellectual property through joint venture requirements, unfair technology licensing rules, purchases of US technology firms with state funding and outright theft.
In addition to the tariffs, the US also plans to impose new investment restrictions, take action against China at the World Trade Organisation and the Treasury Department is also expected to propose additional measures, CNN reported.
The move, which comes on the heels of the administration's steel and aluminum tariffs that also took aim at China, is heightening concerns of a global trade war.
While Beijing has yet to say how it might respond to Trump's order approving possible tariff hikes in response to complaints China steals or pressures foreign companies to hand over technology, it has on several occasions warned US not to unleash trade ills on the world.
'Do not open Pandora's box'
Beijing has warned the United States not to open Pandora's Box and spark a flurry of protectionist practices across the globe. "The malicious practices of the United States are like opening Pandora’s Box, and there is a danger of triggering a chain reaction that will spread the virus of trade protectionism across the globe," a commerce ministry spokesman said.
China has also said that it is "open" to negotiating with Washington amid the spiraling tariff dispute. A Chinese foreign ministry spokeswoman Hua Chunying said at a regular briefing, "Our door for dialogue and discussion is always open."
"We are full of confidence and the capability to defend our legitimate and lawful interests under any circumstances," said Hua Chunying. "Now the ball is in the US court, and we hope the United States will make its decision cautiously and reasonably."
China has repeatedly said that it doesn't want a trade war but has also warned that it will take "firm and necessary" countermeasures to defend its interests. On Sunday, China's Ministry of Commerce expressed hope the US government would withdraw the tariffs "as soon as possible so that the trading of products between China and the United States will return to a normal track."
Limited time for talks
While there have been contacts between senior members of the Trump administration and their Chinese counterparts since Trump announced his intention to impose tariffs, there has been little evidence of intensive negotiations to forestall them.
"The administration is following the Japan model from the 1980s," a tech industry executive was quoted as saying by Reuters. "They'll publish a Federal Register notice of tariffs on certain products, then try to reach a negotiated settlement over the next 60 days."
Wendy Cutler, a former deputy USTR in charge of Asia negotiations, said that addressing the sweeping intellectual property allegations identified by USTR would require major changes to China’s industrial policy. A 60-day settlement may not be realistic in that case.
"I think they’ve set up a high bar for what they need to achieve, in order not to impose these types of tariffs and investment restrictions," Cutler said.
With inputs from agencies
Updated Date: Apr 02, 2018 13:06 PM