China said yesterday it will impose retaliatory tariffs against about $75 billion worth of US goods, putting as much as an extra 10% on top of existing rates in the dispute between the world’s top two economies.
The latest salvo from China comes after the United States unveiled tariffs on an additional $300 billion worth of Chinese goods, including consumer electronics, scheduled to go into effect in two stages on September 1 and December 15.
China will impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States including agricultural products such as soybeans, crude oil and small aircraft. China is also reinstituting tariffs on cars and auto parts originating from the United States.
“China’s decision to implement additional tariffs was forced by the US’s unilateralism and protectionism,” China’s Commerce Ministry said in a statement, adding that its retaliatory tariffs would also take effect in two stages on September 1 and December 15.
The White House and US Trade Representative’s office did not immediately respond to Reuters’ request for comment on China’s latest tariffs.
Though Chinese and US trade negotiators held another discussion earlier in August, neither side appears ready to make a significant compromise and there have been no sign of a near-term truce.
The protracted dispute has stoked fears about a global recession, shaking investor confidence and prompting central banks around the world to ease policy in recent months. US stocks fell yesterday on the news of China’s tariffs, underscoring growth concerns.
In an interview on CNBC, Federal Reserve Bank of Cleveland President Loretta Mester said she viewed the Chinese retaliatory tariffs as “just a continuation” of the aggravated trade policy uncertainty that has begun weighing on American business investment and sentiment.
AGRICULTURE SECTOR HIT
The knock-on effects of the US-China trade dispute was a key reason behind the Fed’s move to cut interest rates last month for the first time in more than a decade.
“It is unclear as things stand whether the US-China trade negotiations will continue as planned in early September,” said Agathe Demarais, global forecasting director at The Economist Intelligence Unit, in an e-mail statement.
“All eyes will now turn to the US Fed to see whether Jerome Powell, the Fed Chairman, will react to these developments by accelerating rate cuts.”
Among US goods targeted by Beijing’s latest tariffs were as soybeans, which will be hit with an extra 5% tariff starting September 1. China will also tag beef and pork from the United States with an extra 10% tariff.
China is also reinstituting an additional 25% tariff on US-made vehicles and 5% tariffs on auto parts that had been suspended at the beginning of the year. Carmakers such as Daimler and Tesla had adjusted their prices in China when the auto and auto parts tariffs had been suspended.
Ford, a net exporter to China, said in a statement it encouraged the United States and China to find a near term solution.
“It is essential for these two important economies to work together to advance balanced and fair trade,” the company said.
White House trade adviser Peter Navarro told Fox Business News that trade negotiations with China would still go on behind closed doors.