BEIJING: China on Wednesday hit back at US President Donald Trump’s tariffs on Chinese exports with 84 per cent levies on its imports from America, intensifying the trade war between the top two economies of the world. The hike in levies, up from 34 per cent, came hours after Trump’s explosive new tariffs on 60 countries, including 104 per cent on China, came into effect after midnight Wednesday US time.
Trump’s threat of the additional 50 per cent tariffs on China on Monday came after Beijing refused to withdraw the 34 per cent tariffs on US goods by Tuesday, which it had announced to retaliate Trump’s 34 per cent levy on Chinese goods announced last week.
China will hike the additional tariffs on products imported from the United States to 84 per cent effective Thursday, state-run Xinhua news agency reported quoting the Customs Tariff Commission of the State Council’s announcement on Wednesday.
The announcement follows the US decision to raise the reciprocal tariffs on Chinese imports from 34 per cent to 84 per cent, a move that is “going further down the wrong path and seriously infringes on China’s legitimate rights and interests,” according to the Commission.
China has filed a lawsuit against the US with the World Trade Organisation’s (WTO) dispute settlement mechanism following the latest US tariff hikes.
The US additional tariff measures seriously violate WTO rules, a spokesperson of the Commerce Ministry said, responding to the additional tariff announcement by the US on Chinese goods over and above the earlier reciprocal tariffs.
The imposition of additional 50 per cent tariffs is a grave mistake on top of an existing one and highlights the unilateral bullying nature of the US actions, the spokesperson said.
Additionally, China added six US firms to its unreliable entity list, the country’s Commerce Ministry announced on Wednesday.
These companies, in disregard of strong opposition from China, have in recent years either participated in arms sales to Taiwan or engaged in so-called military technology cooperation with Taiwan, seriously undermining China’s national sovereignty, security and development interests, a spokesperson for the ministry said, Xinhua reported.
Separately, China has added 12 US companies to its export control list, the ministry said, adding, these companies have engaged in activities that may endanger China’s national security and interests.
Meanwhile, China’s State Council Information Office on Wednesday released a white paper titled ‘China’s Position on Some Issues Concerning China-US Economic and Trade Relations’ saying the “rising unilateralism and protectionism in the United States have significantly impeded normal economic and trade cooperation between the two countries,” according to Xinhua.
Mentioning the trade fiction between the two countries since 2018 and the tariffs imposed by the US from time to time, the white paper said, “These measures — revealing the isolationist and coercive nature of US conduct — run counter to the principles of the market economy and multilateralism, and will have serious repercussions for China-US economic and trade relations.”
The reciprocal tariffs imposed by the US will damage its own and others’ interests, the white paper said, adding, it is a severe violation of the WTO rules that damages the multilateral trading system and erodes the legitimate rights and interests of the parties affected.
As two major countries at different stages of development with distinct economic systems, “it is natural for China and the United States to have differences and frictions in their economic and trade cooperation”, the white paper said. “It is crucial to respect each other’s core interests and major concerns, and find proper solutions to resolve the issues through dialogue and consultation”.
The new tariffs on both sides will hit about USD 575 billion bilateral trade with USD 430 billion Chinese exports to the US. The US trade deficit with China last year totalled USD 295.4 billion, according to official figures.
Trump’s levy of 104 per cent on China amounted to the highest among all the countries that he imposed new tariffs on since he took over office for a new term in January this year.
For China, the US is the third largest export market. Despite China putting a brave front, there is considerable concern here about the impact of Trump’s tariffs on China’s economy, which is struggling with slowdown due to falling exports, low domestic consumption and collapse of the housing market.
China is trying to rejig its export dependent economy to that of the one driven by domestic consumption, which accounts for about 38 per cent of GDP, compared to 60 to 70 per cent in Western countries, according to analysts.
Larry Hu, chief China economist at investment bank Macquarie, estimated that Trump’s latest tariffs could reduce China’s exports by 15 percentage points and its GDP growth by 2-2.5 percentage points.
“The impact could manifest itself through multiple channels such as falling US demand for Chinese goods, the potential global economic slowdown and the hit on export re-routing,” Hu wrote in a research report, according to a Hong Kong-based South China Morning Post (SCMP) report on Monday.
Bracing for Trump’s steep tariff, China’s central bank the People’s Bank of China (PBOC) on Wednesday allowed the Yuan to further weaken against the US dollar, setting its daily fixing rate – also known as the midpoint rate – at 7.2066 per USD to help better returns for its exports worldwide.
On Tuesday, Chinese premier Li Qiang exuded confidence saying that China has “enough policy tools” in reserve and is “fully capable of countering external shocks”, apparently alluding to Trump’s tariffs.
Li told European Commission President Ursula von der Leyen in phone talks that “the resolute measures taken by China are not only to safeguard its own sovereignty, security and development interests, but also to defend international trade rules and international fairness and justice.”
China’s macro policy this year has taken full account of various uncertainties and has sufficient reserve of policy tools to hedge against adverse external impacts, Li said, adding that China is fully confident in maintaining sustained and healthy economic development, Xinhua reported.
