Published: Tue, September 18, 2018
Economy | By

Trump imposes tariffs on $200B more of Chinese goods

Trump imposes tariffs on $200B more of Chinese goods

The US is imposing new tariffs on $US200 billion ($NZ304b) worth of Chinese goods as it escalates its trade war with Beijing.

Australian stocks are set for a weak start with the futures index falling following reports President Trump will finally impose tariffs on $200 billion worth of Chinese goods.

"If the United States launches any new tariff measures, China will have to take countermeasures to firmly ensure our legitimate rights and interests", Foreign Ministry spokesman Geng Shuang told reporters ahead of the expected announcement.

"Negotiated settlement, instead of tariffs, represents the best pathway to resolving outstanding trade issues without creating uncertainty and instability that will negatively impact our port", Sanfield said.

In theory, the tariffs will make US-made products cheaper than imported ones, and so encourage consumers to buy American.

Trump also warned that if China takes retaliatory action against US farmers and industries, the administration will pursue tariffs on about $267 billion of additional imports.

The products spared included consumer electronics like smart watches and Bluetooth devices, child safety products such as high chairs, vehicle seats and play pens, and certain health-and-safety products such as bicycle helmets, the officials said.

A research note by Guotai Junan Securities, a Chinese brokerage, made a similar conclusion, predicting the United States tariffs to date, covering US$250 billion of Chinese products in total, may knock 0.55 percentage points from China's GDP growth.

These will apply to nearly 6,000 items, marking the biggest round of USA tariffs so far.

Australian Trade Minister Simon Birmingham warned the trade war between the U.S. and China would hurt consumers and would have "possible negative effects" on other nation's economies.

U.S. President Donald Trump and China's President Xi Jinping arrive for a state dinner at the Great Hall of the People in Beijing, China, November 9, 2017.

"We have always maintained that the only correct means to resolve the trade dispute is through dialogue and consultation on an equal basis with mutual trust and respect".

The tariffs will start at 10% and rise to 25% on 1 January, the White House announced.

The tariffs follow duties on $50 billion in goods imposed earlier this year. China has retaliated in kind.

On Monday morning, Trump defended his tariffs against China. USA officials point to Beijing's long-range development plan, "Made in China 2025", which calls for creating powerful Chinese entities in such areas as information technology, robotics, aerospace equipment, electric vehicles and biopharmaceuticals. "But, so far, China has been unwilling to change its practices", including theft and force transfer of technology.

Beijing has filed a complaint in the World Trade Organization against the United States actions.

"Although this was expected and we sold off before the close, one would think the market should be down more", said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

"If the U.S. launches any new tariff measures, China will have to take countermeasures to firmly ensure our legitimate rights and interests", foreign ministry spokesman Geng Shuang told reporters during a regular press briefing on Monday.

If the United States continues down this path it will damage the global economy and the layers of multi-lateral relationships that have underpinned growth in the post-war era. It has weakened by about 6.0 per cent since mid-June, offsetting the 10 per cent tariff rate by a considerable margin.

The US Trade Representative's office eliminated 297 product categories from the proposed tariff list, along with some subsets of other categories.

But the adjustments did little to appease technology and retail groups who argued USA consumers would feel the pain.

Farmers, manufacturers, retailers and other industry groups have formed a coalition to oppose the tariffs, calling them taxes on American families.

"Consumers - not China - will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen".

Speaking at the White House, Trump promised "some very positive news" and said that "it will be a lot of money coming into the coffers".

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