The U.S. will implement a tariff on $50 billion in goods from China, the White House announced Friday, setting up a back-and-forth with the country that quickly retaliated with a tariff on products from the U.S. "Thus, the growth and inflation impact on the US economy will depend in large part on China's response, as well as the impact trade tensions have on global growth".
The president argued that the tariffs were necessary to prevent Chinese theft of intellectual property and to boost USA industries, and he threatened to add more to the list of trade restrictions if China retaliates.
The official also said the USA statement, which said Washington would continue to impose additional tariffs if China takes retaliatory measures, has come to China's notice and it reserves the rights to take corresponding measures.
"We will immediately launch tax measures of equal scale and equal strength", the Ministry of Commerce said in a statement on its web site which also called on other countries to "take collective action" against this "outdated and backwards behavior".
"All the economic and trade achievements previously reached by the two parties will no longer be valid at the same time", CNBC reported Beijing as having said. Trump said the tariffs were "essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs".
USA companies often send mostly finished chips to China for assembly, testing and packaging.
In April, the USA revealed an initial list targeting about 1,300 products worth US$50 billion in Chinese imports.
China had earlier threatened to retaliate if the United States imposed import tariffs on its products, and followed through on that threat shortly after the U.S. made its tariffs announcement. He further said the China's decision to impose tariffs on United States products was necessiated by the circumstances that arose out of the USA violations of global obligation.
China had earlier offered to increase purchases of US goods to help defuse the crisis, but Geng said all such proposals would be off the table if Washington went ahead with tariffs. Those include 818 products, worth $34 billion a year, remaining from a list of 1,333 the administration released in April.
But if the president follows through on all the duties he's threatened, including the tariffs against China, U.S. inflation could accelerate by 15 basis points, according to Goldman Sachs.
Interestingly, Trump proposed eliminating all tariffs and trade barriers among the G-7 nations.
"In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China", he continued. "It's like competing in an Olympic race wearing lead shoes", replying to Trump's earlier tweet on wanting China to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States.
Washington and Beijing appeared increasingly headed toward a trade war after several rounds of negotiations failed to resolve US complaints over Chinese industrial policy, market access and a $375 billion trade gap.
And he warned that any retaliation by Beijing would trigger another round of tariffs on Chinese goods.
A staff member walks past U.S. and Chinese flags placed for a joint news conference by U.S. Secretary of State Mike Pompeo and Chinese Foreign Minister Wang Yi at the Great Hall of the People in Beijing, China June 14, 2018.
Beijing also has announced plans to cut import duties on autos and some consumer goods and to ease limits on foreign ownership in auto manufacturing, insurance and some other industries, though those don't directly address U.S. complaints.
That raises the specter of an intensifying trade war, which would hurt consumers, companies and the global economy. Those tariffs were introduced under Section 232 of the U.S. Trade Expansion Act.
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