Washington | Reuters | Updated Sept. 18, 2018 — U.S. President Donald Trump said on Monday he will impose 10 per cent U.S. tariffs on about US$200 billion worth of Chinese imports, but he spared smart watches from Apple and Fitbit and other consumer products such as bicycle helmets and baby car seats.
Trump, in a statement announcing the new round of tariffs, warned that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
China replied Tuesday it has no choice but to retaliate against the new U.S. tariffs, risking even stronger action from President Donald Trump in an escalation of the trade war between the world’s largest economies.
“To protect its legitimate rights and interests and order in international free trade, China is left with no choice but to retaliate simultaneously,” the commerce ministry said in a brief statement, without specifying what action it would take.
Apple’s iPhone was not among the “wide range” of products that the company told regulators would be hit by the $200 billion round of tariffs in a Sept. 5 comment letter to trade officials (all figures US$).
But if the Trump administration enacts a further $267 billion round of tariffs, the iPhone, along with all other smart phones, are likely to be included in the list.
Collection of tariffs on the long-anticipated list will start Sept. 24 but the rate will increase to 25 per cent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries, a senior administration official said.
So far, the U.S. has imposed tariffs on $50 billion worth of Chinese products to pressure China to make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies.
The escalation of Trump’s tariffs on China comes after talks between the world’s two largest economies to resolve their trade differences have produced no results. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.
A senior Trump administration official told reporters that the U.S. was open to further talks with Beijing, but offered no immediate details on when any new meetings may occur.
“This is not an effort to constrain China, but this is an effort to work with China and say, ‘It’s time you address these unfair trade practices that we’ve identified that others have identified and that have harmed the entire trading system,'” the official said.
China has vowed to retaliate further against any new U.S. tariffs, with state-run media arguing for an aggressive “counterattack.”
China’s yuan currency has weakened by about six per cent against the U.S. dollar since mid-June, offsetting the 10 per cent tariff rate by a considerable margin.
Consumer tech trimmed
The U.S. Trade Representative’s office eliminated about 300 product categories from the proposed tariff list, along with some subsets of other categories, but administration officials said the total value of the revised list would still be “approximately $200 billion.”
A broad, $23 billion category of internet-connected devices will remain subject to tariffs, but some products, such as smart watches, Bluetooth devices, and other consumer-focused technology products were removed following a lengthy public vetting period during which more than 6,000 comments were received.
Also spared from the tariffs were Chinese inputs for U.S.-produced chemicals used in manufacturing, textiles and agriculture.
Consumer safety products made in China, such as bicycle helmets sold by Vista Outdoor and baby car seats and other products from Graco also were taken off the list.
But the adjustments did little to appease technology and retail groups who argued that the tariffs would hit consumers hard.
“President Trump’s decision to impose an additional $200 billion is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.
The Retail Industry Leaders Association pointed out that the new tariffs would still hit more than $1 billion worth of gas grills from China, $843 million worth of luggage and travel bags, $825 million worth of mattresses, and $1.9 billion worth of vacuum cleaners.
“Tariffs are a tax on American families, period,” said Hun Quach, RILA’s vice president for international trade. “Consumers — not China — will bear the brunt of these tariffs and American farmers and ranchers will see the harmful effects of retaliation worsen.”
Earlier on Monday, White House economic adviser Larry Kudlow said the U.S. was ready to negotiate a trade deal with China if Beijing was ready for serious discussions.
“We are ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations towards free trade, to reduce tariffs and non-tariff barriers, to open markets and allow the most competitive economy in the world — ours — to export more and more goods and services to China,” Kudlow said.
— Reporting for Reuters by Steve Holland, David Lawder, Ginger Gibson and Eric Beech in Washington.