The Trump administration has announced a 25% tariff on up to 50 billion dollars worth of Chinese imports, instantly escalating a trade dispute between the world’s two largest economies.
China’s government responded quickly by announcing it will immediately impose penalties of “equal strength” on US products. The Commerce Ministry said it is also scrapping deals to buy more American farm goods and other exports as part of efforts to defuse a sprawling dispute over its trade surplus and technology policy.
A ministry statement gave no details, but a 50 billion dollar list of possible targets announced in April included soybeans, light aircraft, orange juice, whiskey and beef. Much of the impact would fall on Mr Trump’s rural supporters.
“The Chinese side doesn’t want to fight a trade war, but facing the shortsightedness of the US side, China has to fight back strongly,” the statement said.
“We will immediately introduce tax measures of equal scale and equal strength, and all economic and trade achievements reached by the two sides will be invalidated.”
Mr Trump has vowed to fulfil his campaign pledge to crack down on what he contends are China’s unfair trade practices and efforts to undermine US technology and intellectual property. During an impromptu appearance on the White House North Lawn, the president hailed his “very big tariffs” on China.
“You know we have the great brain power in Silicon Valley, and China and others steal those secrets. And we’re going to protect those secrets. Those are crown jewels for this country,” Mr Trump said.
“There is no trade war. They’ve taken so much,” he said in an interview with Fox & Friends.
The tariffs will cover 1,102 Chinese product lines worth about 50 billion dollars a year. Those include 818 products, worth 34 billion dollars a year, remaining from a list of 1,333 the administration released in April.
The government will start to collect the tariffs on July 6. The administration is also targeting another 284 Chinese products, which the administration says benefit from China’s aggressive industrial policies, worth 16 billion dollars a year but will not impose those tariffs until it collects public comment.
Mr Trump has already slapped tariffs on steel and aluminium imports from Canada, Mexico and European allies. His decision on the Chinese tariffs comes in the aftermath of his summit with North Korean leader Kim Jong Un.
The president has co-ordinated closely with China on efforts to get Pyongyang to eliminate its nuclear arsenal. But he signalled that whatever the implications, “I have to do what I have to do” to address the trade imbalance.
Wall Street has viewed the escalating trade tensions with wariness, fearful that they could strangle the economic growth achieved during Mr Trump’s watch and undermine the benefits of the tax cuts he signed into law last year.
The administration is also working on proposed Chinese investment restrictions by June 30.